American International Group (AIG), the world's largest insurance company, reported net income for the second quarter of 2001 increased by 15.6% to $1.63bn (£1.14bn), compared to $1.41bn (£98m) in the second quarter of 2000.

Its strength in general insurance helped to offset losses from catastrophes, which were $30m (£21m) in the quarter, compared to $19m (£13.3m) the previous year, and were largely attributed to the tropical storm Allison.

Pre-tax profits from general insurance rose 6.6% to $946m (£662m).

However, AIG chairman Maurice Greenberg said there was still room for improvement.

He said: “While the global economy remains soft, the flight to quality underway in many markets benefits AIG with our strong ratings and financial condition.

“We have undertaken a number of new marketing initiatives and alliances and launched an array of new products that will benefit future growth in our businesses.”

About 14% of AIG's business comes from property and casualty insurance, 40% from life insurance and 20% from financial services.AIG is currently in the process of acquiring life assurer American General.