Two years after repaying a U.S. bailout, American International Group Inc. faces another challenge: a big decline in net income and a dip in property/casualty insurance results during its 2014 first quarter compared to last year. Even so, AIG President and CEO Robert Benmosche tried to put a positive spin on things during the company’s May 6 earnings call.

“Property/casualty had its second-best quarter in the last 12 quarters,” Benmosche said. “Unfortunately, the best quarter was the first quarter of last year, so we are comparing the second-best quarter to the best quarter. You will see some declines.”

He added that “if you look at accident-year loss ratios and other measures, that business continues to build a very strong foundation for the future.” Benmoshe and his executive team insisted during the call that trends would normalize during the year and that AIG encountered a more normal rate of P/C losses so far in 2014 after “an unusually low year” in 2013.

AIG’s net income of $1.6 billion during the 2014 first quarter ($1.09 in diluted earnings per share) represents a big drop over $2.2 billion ($1.49 in diluted earnings per share) pulled in over the same period in 2013.

AIG’s P/C arm reported more than $8.3 billion in net premiums written during the quarter, down from over $8.4 billion in the 2013 first quarter. The division produced a $97 million underwriting loss compared to $232 million in net underwriting income a year ago.

Net investment income also dipped during Q1, and the division’s combined ratio reached 101.2, up from 97.3 year-over-year. AIG, as has several of its peers, blamed higher catastrophe losses as well as severe losses during the winter for harming its bottom line, plus unfavorable loss reserve development. Catastrophe losses during the 2014 first quarter hit $262 million, up from $41 million over the same period in 2013.

AIG said the P/C numbers generally hit expectations, and the company noted that taking out foreign exchange rates actually boosted net premiums written in Q1 2014 over Q1 2013.

Broken down further, AIG’s commercial insurance generated $4.996 billion in net premiums written compared to $4.9 billion last year. This division produced $113 million in underwriting income, but that’s down from $396 million in the 2013 first quarter. A combined ratio of 97.7 is up from 92.2 in the 2013 first quarter.

Consumer insurance underwriting came in with $3.3 billion in net premiums written versus more than $3.5 billion in the 2013 first quarter. An underwriting loss of $59 million compares to $55 million in underwriting income in the 2013 first quarter. The combined ratio for this arm came in at 101.9 versus 98.4 year-over-year.

A bright spot: AIG’s life and retirement division, which booked more than $7.1 billion in premiums and deposits during the 2014 first quarter, up from $5.58 billion a year ago. Net investment income remained static, though assets under management soared to more than $324.4 billion, up from nearly $296.9 billion in the 2013 first quarter.

On the other hand, the company’s mortgage guarantee arm declined in new policies and net premiums written but produced a boost in underwriting income and net investment income.

In December, AIG announced a plan to sell International Lease Finance Corp. (a leaser and marketer of commercial aircraft) to AerCap Holdings N.V. for $5.4 billion in cash and stock. The sale is part of AIG’s master plan to streamline and shed noncore assets, and Benmosche said the deal remains on track to close in the 2014 second quarter.