CEO shifts bets to highly rated debt, commercial property; proceeds from redemptions are already $1.2 billion, CFO says. (AP Photo)

(Bloomberg) – American International Group Inc., the insurer burned by losses on hedge funds, has submitted notices of redemption for $4.1 billion of those holdings through the end of the first quarter.

“As of today, we have received $1.2 billion of proceeds from those redemptions,” Chief Financial Officer Sid Sankaran said Tuesday in a conference call discussing results at the New York-based insurer.

Hedge funds helped drive a $183 million first-quarter net loss, the insurer’s third-straight unprofitable period, AIG said in a statement Monday after markets closed. The company is scaling back from those holdings as lock-up periods expire and instead investing in highly rated bonds and property lending.

“That frees up capital that can be deployed in our core business, which is underwriting insurance risk,” Chief Executive Officer Peter Hancock said in a televised interview with Bloomberg’s Betty Liu. “The focus of the company is to improve our sustainable earnings, which comes from improved underwriting and improved cost efficiency and improved capital efficiency.”

Operating earnings were 65 cents a share, missing by 35 cents the average estimate in a Bloomberg survey of analysts. AIG dropped 2.5 percent to $55.18 at 10:24 a.m. in New York, extending its decline for the year to 11 percent.

The loss on hedge funds widened to $537 million in the first quarter from $349 million during the same period last year. Average invested assets in hedge funds were $10.1 billion for the first quarter, compared with $11 billion in the last period of 2015, according to a supplemental filing on the company’s website. Sankaran didn’t identify which hedge funds the insurer is leaving.

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