American International Group Inc.'s higher second-quarter profit may signal a turning point in the insurer's efforts to revamp its operations and improve results, analysts say.

The second quarter, the first full quarter since AIG announced its strategic plan in January, was a critical test for AIG, Joshua Stirling, a senior analyst at Sanford C. Bernstein & Co. L.L.C. in New York, wrote in an investment note after AIG released its results Tuesday. “It appears, with the quarter showing healthy progress, the firm has survived this test, and the turnaround may be turning the corner,” he added.

AIG reported a second-quarter profit of $1.9 billion, up 7.4% from the year ago period.

AIG President and CEO Peter Hancock said during a Wednesday morning conference call that the insurer is implementing its strategic plan faster than expected. The plan included simplifying AIG's structure, exiting unprofitable lines and selling non-core business units.

“We've executed more quickly and smoothly than expected and our confidence in reaching our 2017 financial targets is high as earnings become more sustainable,” he said.

“Across AIG we are simplifying the company, accelerating our decision making and adhering to a consistent management philosophy. We're executing on our objectives of managing our core operating portfolios to increase return on equity and managing our legacy portfolio for capital return,” Mr. Hancock said.

Net written commercial property/casualty premiums in the second quarter fell 20.8% to $4.42 billion. Investment income for the commercial property/casualty operations fell 21.2% to $891 million. Catastrophe-related losses increased 68.9% to $353 million, while the combined ratio deteriorated to 102.1% from 98.8%.

AIG has been under fire from activist investor Carl Icahn to split into three independent companies — property/casualty, life insurance and mortgage guaranty insurance — to enhance value and remove the “systemically important financial institution” designation imposed on AIG by the federal Financial Stability Oversight Council.

According to Mr. Stirling of Sanford Bernstein, the results “may be just in time to satisfy the activists the company is making progress — and in front of the fall buildup to the winter proxy season, it may not be a moment too soon. Simply put, for AIG to retain control of the situation, it was critical that they demonstrated momentum in their tactical efforts to drive margins and return capital.”

Mark Dwelle, an analyst with RBC Capital Markets Inc. in Richmond, Virginia, wrote in a note that “net written premiums declined 21% which was steeper than our forecast 12% decline. The overall combined ratio of 102.1% was weaker than our 98.8% forecast reflecting both higher catastrophe losses and reserve additions.”

“While the commercial (property/casualty) results included some disappointments — reserve adds,” Mr. Dwelle wrote, “the overall companywide results were decidedly better than expected led by both better than forecast investment results as well as, for most units, lower than expected expenses.”

He added, “there are a few small elements of progress relative to the company's strategic plan most notably in monetizing legacy assets and divestitures and in personal insurance.”