AIG has retained a stable credit outlook from Moody’s Investors Services on a stronger than expected second quarter and a $US3 billion ($2.84 billion) share purchase from the US Treasury.

Moody’s reaffirmed AIG’s senior unsecured debt at the same Baa1 level the insurance giant was given in January last year, when Moody’s cut its rating by one notch from A3.

Standard & Poor’s (S&P) has also kept a watching brief on AIG, rating the insurer at A- stable in its June 2012 outlook. S&P’s rating on AIG is unchanged since the height of the credit crisis in late 2008, when the insurer was forced to seek a US taxpayer-funded bailout to remain afloat.

AIG’s most recent steps towards recovery include a $US2.3 billion ($2.2 billion) net profit for the three months to June 30, up 27% on the previous corresponding quarter, and a reduction of the US Treasury’s stake in the company from 61% to 55% as part of a $US5 billion ($.73 billion) share sale.

Under the most recent share offering from the US Government, AIG will buy back $US3 billion of its own stock at $US30.50 ($28.83), a slight premium on the $US28.72 ($27.15) price paid for AIG at the height of the credit crunch.

AIG has now paid back 86%, plus interest, fees and other gains, of the $US182 billion ($172 billion) Federal Reserve bailout.

Moody’s says its rating reflects AIG’s “leading market positions of its core insurance operations, its broad diversification... its divesture of non-core business and the strong liquidity of the company”.

The ratings agency says weak profitability, exposure to non-core areas of the business and a complex risk management strategy have prevented any immediate upgrade.

“We believe the direct investment book and AIG as a whole have sufficient capital and liquidity to support the current ratings, even after the share buybacks of recent months,” lead analyst Bruce Ballentine said.

In recent months, AIG has made tentative steps to recast its public image in a softer light as it inches closer to private ownership. The company announced in June that the Chartis brand, adopted in 2009 for its general insurance operations, is to be dropped.