AIG said Friday it was profitable for the second straight quarter as its core insurance operations continue to stabilize after the company's bailout by the government last year.

American International Group Inc. also said the amount of its government financial assistance dropped by 4 percent during the third quarter.

Its results got a lift from the increasing value of investments it still holds that soured last year and helped drive it to the brink of collapse.

While new insurance business stabilized compared with the second quarter, it is still sharply below year-ago figures as the economy remains weak and AIG struggles with its image after being bailed out by the government. A recovery in its core insurance operations is considered vital to AIG repaying the government.

CEO Robert Benmosche warned earnings will remain choppy as the company executes its restructuring plan.

"We continue to focus on stabilizing and strengthening our businesses, but expect continued volatility in reported results in the coming quarters, due in part to charges related to ongoing restructuring activities," Benmosche said in a statement.

AIG said it plans to record a $5 billion charge in the fourth quarter as it proceeds with spinning off two of its major life insurance businesses. The insurer is shedding American International Assurance Co., or AIA, and American Life Insurance Co., also known as ALICO, as it looks to repay the government.

Shares of AIG fell $3.71, or 9.5 percent, to $35.57 in late morning trading.

On shaky ground
Len Blum, a managing partner at investment bank Westwood Capital, said "there is still tremendous risk."