American International Group Inc. (AIG) swung to a second-quarter loss on more than $11 billion in investment losses and a write-down related to its credit default swap portfolio.

Shares fell 5.8% in after-hours trading as the insurance giant posted its third consecutive quarterly loss. Steep write-downs tied to subprime mortgages resulted in AIG posting a total of $13 billion in losses in the previous two quarters.

The latest quarter included $6.08 billion in pre-tax net realized capital losses and a $5.56 billion pre-tax write-down related to its credit default swap portfolio.

"Our second-quarter results were adversely affected by the severe conditions in the housing and credit markets and a very difficult investment environment. These results do not reflect the earnings power and potential of AIG's businesses and it is clear that we have a lot of work to do to restore AIG's profitability to where it should be," said Chief Executive Robert Willumstad. He had replaced Martin Sullivan, who resigned in June amid pressure from major shareholders to improve the company's performance.

In the second quarter, the insurance giant reported a net loss of $5.36 billion, or $2.06 a share, compared with net income of $4.28 billion, or $1.64 a share, a year earlier.

The latest results included net realized capital losses of $4.02 billion, primarily from other-than-temporary impairment charges in AIG's investment portfolio, with an additional $17 million pretax other-than-temporary impairment charge related to available-for-sale investment securities. These charges resulted primarily from rapid declines in market values of residential mortgage-backed securities.

AIG had an operating loss, which excludes investment gains or losses and other items, of 51 cents a share compared with operating earnings of $1.77 a year earlier.

Revenue dropped 36% to $19.9 billion.

Analysts' mean estimates were for per-share operating earnings of 63 cents on revenue of $31.49 billion, according to a poll by Thomson Reuters.

Earnings in AIG's general-insurance segment fell 72%. The combined ratio, a ratio of benefits paid to premiums earned and a key indicator of an insurance company's profitability, rose to 97.71% from 87.12%. A figure below 100% indicates an underwriting profit.

After becoming chief executive, Willumstad, who had been AIG's chairman since 2006, launched a review of the company's businesses, which range from car and life insurance to consumer lending to aircraft leasing. He said Wednesday that he would report on his findings in late September.

Many people have speculated that AIG may sell or spin off some units, especially noninsurance businesses. However, Willumstad recently said aircraft-leasing titan International Lease Finance Corp. will remain a part of AIG.

In May, AIG raised $20.25 billion by selling common stock, equity units and fixed-income securities, 62% more than its original target because of strong demand.

AIG has been more exposed to the mortgage market than many insurers; it sells mortgage insurance and makes consumer loans, and it sold credit protection on mortgage-backed securities.

AIG's shares were at $27.40, down $1.69, in after-hours trading. The stock price has fallen 61% since last fall.

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Dow Jones Newswires