(Bloomberg) ? Shares of American International Group Inc., the world?s largest insurer, rose the most in 13 months after the company?s second-quarter earnings surpassed analysts? expectations. The stock climbed $1.83, or 3.1 percent, to $60.32 in New York Stock Exchange composite trading, the biggest gain among members of the Dow Jones Industrial Average.

Profit before changes in the value of investments and accounting adjustments was $1.44 a share, ten cents more than the estimate of Mark Lane, an analyst at William Blair & Co. in Chicago.

New York-based AIG reported results yesterday after the close of regular trading.

AIG?s underwriting income from property and casualty coverage surged to a record, outweighing lower-than-expected earnings from its life insurance units outside the US chief executive officer Martin Sullivan is trying to restore confidence in AIG?s earnings prospects after settling probes of the company?s accounting and sales practices in February. ?Even in a quarter when the company didn?t have all cylinders firing, they were able to put up solid results,? said Gabriel Solomon, an insurance analyst at T. Rowe Price Group in Baltimore, which owns more than 23 million AIG shares.

?This is still a vibrant global franchise that should be able to reaccelerate growth in the future.?

Through yesterday, the stock had dropped 14 percent this year, underperforming the 6.1 percent decline in KBW Insurance Index.

Sullivan took over after state and federal accounting investigations ended Maurice ?Hank? Greenberg?s 38-year reign in March 2005. Net income in the quarter dropped 29 percent to $3.19 billion, or $1.21 a share, on a decline in the value of derivative investments the company held during the quarter.

Derivatives are financial instruments derived from stocks, bonds, loans, currencies and commodities, or linked to specific events like changes in the weather or interest rates. AIG?s pretax underwriting income from its property and casualty businesses in the US and abroad rose 93 percent to $1.37 billion, higher than Lane?s estimate of $1.07 billion, as claims costs fell and premium revenue rose.

Profit from sales of international life insurance and retirement savings products fell short of his expectations amid increased competition in Japan, the company?s largest market.

Earnings rose 4.2 percent to $1.5 billion, excluding a correction for how certain interests in investment trusts were booked and investment gains.