American International Group’s property and casualty business got its first underwriting profit in two and a half years. In the first quarter, the company wrote more premiums at higher prices and got lower losses.

The turnaround in AIG’s property and casualty business helped the company beat the expectations made by analysts. It sent its shares up 3 percent in after-hours trading. The unit got a combined ratio of 97.3 percent in the first quarter, which is the first time the ratio fell below 100 since the third quarter of 2010. A combined ratio below 100 is a sign of underwriting profit, as the insurer get more in premiums than it is paying out in claims.

Insurers are having a hard time increasing prices in the property and casualty business for some time. AIG hasn’t reported a yearly underwriting profit since 2007. Other insurers that beat earnings expectations last month included Travelers Companies Inc., ACE Ltd, and Chubb Corp. They attributed it to higher pricing.

AIG’s property and casualty unit got an operating income of $1.6 billion in the first quarter, which was up from $1 billion the previous year. The unit got underwriting income of $231 million, compared to a $180 million underwriting loss in the same period last year.

The company’s life insurance unit reported improvement as well. It got higher returns on alternative assets and gains on the value of securities from its investment portfolio. Its operating income increased to $1.4 billion from $1.3 billion the previous year. It is still navigating a low interest rate environment that has a negative impact on its income from bonds and makes it hard to sell fixed annuities.

AIG’s total profit dropped 35 percent to $1.98 billion from $3.05 billion a year ago. Its operating earned $1.34 per share, which is higher than the expectations of analysts of 87 cents per share.

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