American International Group

(AIG) - Get Report

said its first-quarter profits rose as demand for insurance grew and rates increased.

The insurance company posted first-quarter net income of $1.98 billion, or 75 cents a share, a 6.7% increase from the year ago quarter's $1.86 billion, or 70 cents a share.

Excluding charges for capital gains losses and the effect of an accounting change, the company's adjusted net income was $2.13 billion, or 81 cents a share, an 11% increase from $1.92 billion, or 72 cents a share, a year ago. On that basis, the results were in line with Thomson Financial/First Call estimates of 81 cents a share.

During the quarter, AIG saw record general insurance net premiums of $6.33 billion, a 30% increase from last year. Life insurance premiums also reached an all time high of $12.82 billion.

Insurance rates began rising sharply last year, and both rates and demand have skyrocketed since the terrorist attacks of Sept. 11.

Shares of AIG closed at $68.34 Wednesday before the earnings release.