AIG has reduced its debt to the US Treasury by $US6.9 billion ($6.8 billion) following settlement of its life insurance assets.

The fifth and most recent payment by AIG takes total amount it has repaid to $US36 billion ($35.8 billion), two-and-a-half years after the US Government stepped in save the company at the height of the credit crunch.

The US Treasury says it retains $US11.3 billion ($11.2 billion) in AIG equity but is confident that “taxpayers will ultimately recover every dollar that the US Government invested in AIG”.

Aggregate proceeds from the sale of the group’s American Life Insurance group to Metlife were $US9.6 billion ($9.5 billion), minus $3 billion ($2.98 billion) placed into an escrow account as collateral.

More than 70% of the $US411 billion ($409 billion) borrowed under the Troubled Asset Relief Program (TARP) program has now been returned to the US Government.

A Treasury spokesman said TARP investment programs will result in “little or no cost” to US taxpayers.