The move underscores how the wild market gyrations sparked by runaway inflation, rising interest rates and the Russia-Ukraine war are forcing companies to rethink their IPO plans.
AIG's unit - set to be renamed Corebridge Financial Inc when it goes public - had filed for its offering in March and planned to complete its listing by the end of June.
"Completing the IPO is a significant priority for us and we remain ready to execute," Chief Executive Officer Peter Zaffino said without giving a new deadline for the offering.
AIG - one of the world's biggest commercial insurers - had first announced the move in 2020 and it sold a 9.9% stake in the unit to private equity firm Blackstone Group Inc for $2.2 billion last year.
The uncertain economic outlook has also put an end to the boom in investment income insurers enjoyed last year when the rapid recovery from the COVID-19 crisis boosted market returns.
AIG's total consolidated net investment income fell 29% in the second quarter ended June to $2.6 billion, hurt in part by weakness in alternative investments such as private equity.
Adjusted after-tax income attributable to the company's common shareholders fell to $979 million, or $1.19 per share, from $1.3 billion, or $1.52 a year earlier.
AIG said net premiums written in its general insurance business rose 5% on a constant currency basis to $6.9 billion, while underwriting income climbed 73%.
General insurance adjusted pre-tax income jumped 5% to $1.26 billion, boosted by a $336 million increase in underwriting income.
(Reporting by Noor Zainab Hussain and Niket Nishant in Bengaluru; Editing by Aditya Soni)
