AIG said net income for the quarter ended Sept. 30 fell to $3.09 billion, or $1.19 a share, from $4.22 billion, or $1.61 a share, a year earlier.
Excluding items, the insurance giant earned $1.44 a share, missing analysts' consensus estimate of $1.62 a share, as compiled by Thomson Financial.
The company's investment portfolio posted a loss of $864 million, including impairments of approximately $149 million related to AIG's residential mortgage-backed securities portfolio.
Despite the volatility of the recent quarter, AIG's exposure to the residential mortgage-backed securities market within the investment portfolios "remains high quality and with substantial protection through collateral subordination."
Shares of AIG, which lost nearly 7% in the regular session, lost 2.5% in recent after-hours trading to $56.46.
The stock has plunged about 20% in the past month.