The New York-based insurance giant said it lost $4.35 billion, or $1.98 per share, during the quarter ended March 31st, compared with $7.81 billion, or $3.09 per share, during the same quarter last year.

AIG lost $61.7 billion during the fourth quarter - the most ever in a quarter by a U.S. corporation - amid the mushrooming credit crisis and shortly after its near collapse.

AIG's first-quarter operating loss, which excludes impairment and accounting charges, totaled $1.6 billion. The impairment charge for the quarter totaled $2.63 billion, compared with $3.96 billion during the year-ago period.

The first-quarter loss was primarily tied to costs from the winding down of its financial products unit, which was at the centre of the insurer's near collapse last fall.

AIG was bailed out by the U.S. government on the same weekend in September that investment bank Lehman Brothers Holdings failed. Since that time, AIG has received four rounds of government support to help it remain in business amid fears that a full collapse of the insurer that was once the world's largest would create widespread devastation in the financial markets.

Since the initial cash infusion from the government, AIG has been working toward repaying the loans by selling off business units. It has announced 11 asset-sale agreements in recent months.

AIG has not specifically disclosed which assets it is selling or the expected sales prices. However, the company has said it plans to retain its U.S. property and casualty and foreign general insurance businesses, and a stake in its foreign life insurance operations.