NEW YORK ? American International Group Inc., one of the world?s largest insurance companies, said yesterday its net income fell 29 percent in the second quarter from a year earlier despite growth in its general insurance and life insurance divisions.

The New York-based company said net income in the April-June period totalled $3.19 billion, or $1.21 a share, down from $4.49 billion, or $1.71 a share a year earlier.

Adjusted for capital gains and hedge accounting rules, net income was $4.16 billion, or $1.58 a share, in the second quarter compared with an adjusted income of $3.28 billion, or $1.25 a share, in the second quarter of 2005.

Revenue was $26.74 billion, down slightly from $27.9 billion a year earlier.

Analysts surveyed by Thomson Financial had projected second-quarter earnings of $1.39 per share on revenue of $29.2 billion. The earnings report was issued after the market closed.

AIG shares fell $1.19, or nearly 2 percent, to $58.49 in regular trading yesterday on the New York Stock Exchange and fell 49 cents more in after-hours trading.

The shares have traded in a range of $57.52 to $71.09 in the past year.

Martin J. Sullivan, AIG?s president and chief executive, said in a statement accompanying the report that the quarter?s performance reflected the strength of AIG?s business diversification.

?General insurance posted record underwriting profits,? he said.

?Net premiums written increased across the board, and our general insurance operations are well-positioned to capitalise on opportunities in the current market environment.?

He said the performance of the life insurance and retirement services division was mixed, ?including strong production results in the domestic life insurance ... with an ongoing difficult sales environment in individual fixed annuities.?

Operating income in the general insurance division was $2.99 billion, up nearly 70 percent from the second quarter of 2005, the company said.

Life insurance and retirement services, meanwhile, posted operating income of $2.61 billion, up 9.7 percent from the year-earlier quarter.

Income in the asset management business also rose, but operating income in financial services fell after accounting adjustment and weaker credit conditions in the United States and some foreign markets, including Taiwan.

Net income for the first six months was $6.39 billion, or $2.43 per share, down from $8.29 billion, or $3.16 a share, in the first six months of 2005.

AIG said its consolidated assets were $900.67 billion as of June 30, and shareholders? equity was $87.71 billion.