AIG Private Equity, Hedge Fund Returns Plunge 84%

American International Group Inc., the world's largest insurer by assets, said private equity and hedge fund returns fell 84 percent in the first quarter because of the gridlock in credit markets.

Income from so-called alternative investments shrank to $197 million from $1.22 billion a year earlier, New York-based AIG said yesterday. The company said hedge funds were ``a real laggard.'' AIG had $29.4 billion in alternative holdings as of March 31, about 3.5 percent of its investment portfolio.