American International Group’s life and retirement businesses delivered the highest level of quarterly earnings in the company’s history, the company reported today.

The results partially offset weakness in AIG’s dominant property and casualty operations, which resulted in a year-to-year decline in operating income for AIG.

The insurer posted first-quarter earnings excluding extraordinary items of $1.21 per share, compared to $1.34 a share in the year-earlier period.

Revenue decreased to $8.23 billion from $8.56 billion a year ago.

Analysts had expected AIG to report adjusted earnings of $1.07 a share on $9.36 billion in revenue, according to a consensus estimate from Thomson Reuters.

At the PC unit, net premiums earned fell 4 percent to $8.23 billion, which led to a 26 percent drop in profitability. The primary driver of the decline was a deterioration of underwriting profits, which swung from a gain of $232 million to a loss of $97 million.

The life business, by contrast, showed strong growth, driven by increases in fee income and enhanced spread income, according to Jay S. Wintrob, CEO of AIG life and retirement.

The life business reported higher account balances, due to strong sales and equity market appreciation, and generated increased fee income.

Interest rate sensitive businesses continue to benefit from disciplined pricing on new business, reduced renewal crediting rates, and runoff of older business crediting relatively high interest rates, Wintrob said.

Retail sales were up 61 percent from the year ago period, reaching nearly $4.4 billion in the quarter, and sales of retirement income solutions products — including individual variable annuities and fixed index annuities — reached nearly $2.2 billion in the quarter, up 54 percent from the year ago period.

Wintrob said fixed annuity sales more than doubled from the year ago period to $960 million, and that the company continued its role as the number one provider of these instruments through the bank channel. Wintrob said that AIG has been the No. 1 seller of fixed annuities through the bank channel for 18 years.

At the end of the first quarter, assets under management reached $324 billion, up 9 percent from a year ago, driven by strong retail investment product net flows, higher separate account balances and greater institutional assets.

Wintrob also said that consumer demand for variable annuities “remains very strong,” and competitors are increasing their presence in this market. He noted that AIG has been redesigning its products in this market for four years to “derisk” the business.

He said that, currently, approximately three quarters of AIG’s $25.3 billion of variable annuities with guaranteed minimum withdrawal benefits portfolio includes benefits with “strong de-risking features,” such as the VIX indexing of writer fees and volatility control funds.

The VA business in general has seen a number of competitors leave the market, while other players have reduced their market presence to reduce risk. Wintrob said that as part of this trend, AIG is requiring minimum allocations to the fixed account as a means of reducing risk.

He also said that AIG is benefiting from growth in index annuities as a result of improved product features, a low interest rate environment and AIG’s strong strong presence in the bank channel.