NEW YORK (Bloomberg) — American International Group, the insurer that’s shrinking under pressure from activist shareholders, posted a third-straight unprofitable quarter on losses from hedge funds and declines in the value of other investments.

The first-quarter net loss of $183 million, or 16 cents a share, compares with profit of $2.47 billion, or $1.78, a year earlier, the New York-based company said yesterday in a statement. Operating profit, which excludes some investment results, was 65 cents a share, missing the $1 estimate of 20 analysts surveyed by Bloomberg.

Chief executive officer Peter Hancock is reshaping the insurer’s portfolio, expanding bets on highly rated bonds and property lending while scaling back on hedge funds after the company was burnt on those investments. AIG also is among insurers that have large holdings of bonds tied to energy and mining, assets that were pressured by declines in commodities prices.

“Results were impacted by market volatility on investments,” Hancock said in the statement, which also highlighted his efforts to cut costs and simplify the company. “By transforming AIG into a leaner, more profitable and focused insurer, we can leverage our risk expertise.”

The loss on hedge funds widened to $537 million from $349 million in last year’s first quarter. Results also included $1.11 billion in net realised losses, compared with a gain of $1.34 billion in the first three months of 2015, according to AIG’s statement, which didn’t include a breakdown of impairments.

The insurer dropped 2.8 per cent to $55 in extended trading in New York. AIG had slipped 8.7 per cent this year compared with the 1.8 per cent climb in the S&P 500 Index. Results were released after the close of regular trading.

AIG also intends to exit personal insurance in dozens of countries after announcing deals to scale back in Taiwan and sell operations in Panama, El Salvador and Guatemala, Hancock said in his annual letter in March. The CEO also announced a reinsurance agreement that month in which Swiss Re agreed to take on some of AIG’s risks tied to casualty policies.

The changes, along with job cuts, are designed to improve return on equity in the long run. Activist investor Carl Icahn has mocked Hancock for failing to generate a 10 per cent ROE. AIG agreed in February to appoint hedge fund manager John Paulson and a representative of Icahn’s firm to the insurer’s board.

The normalised ROE, which excludes some one-time items, was 8.9 per cent in the first quarter, compared with 7.8 per cent a year earlier. Book value, a measure of assets minus liabilities, climbed to $78.28 a share from $75.10 at the end of last year, helped by stock repurchases.

Profit at the commercial insurance operations, run by Rob Schimek since his promotion in December, fell 39 per cent to $889 million. Kevin Hogan’s consumer business slipped 17 per cent to $788 million. Both divisions were hurt by deteriorating investment results.

At the largest segment under Schimek, property-casualty coverage, income slipped 38 per cent to $720 million. Policy sales fell 15 per cent to $4.31 billion on the Swiss Re deal. The combined ratio improved to 96.9, meaning the insurer had an underwriting profit of 3.1 cents on every premium dollar, after paying claims and expenses. That compares with a ratio of 97.1 a year earlier.

Hancock has planned some initiatives for growth, including a joint venture announced last week with Hamilton Insurance Group and hedge fund firm Two Sigma Investments to sell coverage to small- and mid-sized enterprises. The goal is to better use data analytics when underwriting insurance policies.

At the mortgage insurer, which guards lenders against borrower defaults, profit rose 12 per cent to $163 million as claims costs declined. Hancock has filed for an initial public offering to sell a stake in the United Guaranty mortgage insurer, and plans to eventually exit the operation. At the other unit under Schimek, institutional markets, profit plunged to $6 million from $147 million, hurt by investment results.

At the retirement operation, the main segment under Hogan, profit slumped 42 per cent to $461 million, driven by hedge fund losses. Life insurance fell 39 per cent to $105 million. AIG said personal insurance generated $222 million, compared with $26 million loss a year earlier. The improvement reflects lower expenses and better underwriting results tied to US property coverage.