"We promised the American taxpayers we would repay them, and the initial public offering of AIA last week and the completion of the ALICO transactions move us closer to delivering on our promise," said Robert H. Benmosche, AIG president and chief executive officer, in a statement.

The ALICO sale includes $7.2 billion in cash and $9 billion in MetLife securities to be sold over time to provide more funds to pay back the government. The government made more than $182 billion available to the New York-based company two years ago when it faced a liquidity crisis due to a downgrade in its credit rating. AIG said it owed the government $101.2 billion as of June 30.

The news comes about a month after AIG announced a plan with federal officials to repay American taxpayers and restructure the company.

Then AIG said its direct debt to the FRBNY and the $26 billion interest the FRBNY had in two special purpose vehicles would be repaid in full, and that AIG would issue common stock to the Treasury to up its ownership in AIG to about 92 percent from 80 percent. This will be accomplished by converting $49.1 billion of preferred shares it has under the Troubled Asset Relief Program into about 1.66 billion shares of common stock.

The Treasury will then sell the common stock to the public over time, but not until the FRBNY is repaid.

The Treasury's shares of common stock in the company are worth about $69.5 billion, based on current market value, which exceeds the Treasury's $47.5 billion cash investment in AIG, it said in the update.

The estimate has led the government to believe it will "earn a profit on its loans and investments in AIG assuming the restructuring announced September 30 is completed," Treasury said.

The restructuring is expected to be completed by the end of the 2011 first quarter, AIG has said.

To repay the $26 billion interest FRBNY has in two special purpose vehicles, $22 billion in TARP funds will be used to purchase an equal amount of interests in each SPV before giving them to the Treasury as part of the plan to sell stock to the public, AIG said.

The Treasury's estimates of projected losses on its investment in AIG were questioned late last month by an independent auditor of TARP.

Special Inspector General of TARP, Neil Barofsky, questioned the "dramatic shift" from the $45 billion loss on its AIG investment just six months ago to a newly projected loss of $5 billion in recent weeks.

While he admitted AIG's situation has improved during the last half-year, Mr. Barofsky wondered if it was due to a "change in the Treasury's methodology for calculating losses" rather than AIG's improvement.