NEW YORK—American International Group Inc. has repaid the Federal Reserve Bank of New York as part of its recapitalization plan resulting from its 2008 bailout by the federal government, the insurer said Friday.

The plan included repaying a roughly $21 billion credit line that AIG owed to the New York Fed.

As part of the recapitalization plan also involving the AIG Credit Facility Trust and U.S. Treasury Department, New York-based AIG also said it had exchanged various forms of government support into common shares, resulting in the Treasury Department owning approximately 92% of AIG's common stock.

The Treasury Department and New York Fed confirmed the closing of the transaction. Treasury now owns 1.66 billion shares of AIG and around $20 billion of preferred equity interests in two AIG subsidiaries.

“Today, AIG, with the support of countless people, has accomplished a huge goal that many people once thought impossible: completely repaying the Federal Reserve Bank of New York,” AIG President and CEO Robert H. Benmosche said in a statement. “Now, we will continue to focus on strong business performance for the benefit of all of our stakeholders, including our largest shareholder, the Treasury Department.”

He expressed gratitude for the roughly $180 billion bailout package “that taxpayers provided during the financial crisis of 2008, and we continue to believe they will realize a profit on their investment in AIG.”

Treasury's total cash investment in AIG is now $68 billion, and the agency expects to exit its investments over time, subject to market conditions, in order to recoup taxpayer funds, according to a statement.

"Treasury remains optimistic that taxpayers will get back every dollar of their investment in AIG," Treasury Secretary Tim Geithner said in the statement.

AIG on Wednesday provided further details of its recapitalization plan, first announced in September 2010, such as the issuance of 75 million warrants granting shareholders the right to buy stock at $45 per share by Jan. 19.

The New York Fed said in its statement that AIG's credit line had been scheduled to expire in 2013. AIG's accelerated repayment frees up collateral that will enable the company to access private debt markets, “an essential step” toward facilitating the Treasury's sale of stock it owns, the statement said.

“This (recapitalization transaction) concludes an important effort by the Federal Reserve to stabilize the financial system in order to protect the U.S. economy,” said William C. Dudley, president of the New York Fed, in its statement.

In September 2008, the New York Fed provided AIG with an emergency loan of up to $85 billion to prevent its collapse. The assistance provided by the Federal Reserve was restructured over time, and supplemented in November 2008 and April 2009 by additional financial assistance from the Treasury Department under the Troubled Asset Relief Program.

As part of the November 2008 restructuring of the government's assistance to AIG, two special purpose vehicles, Maiden Lane II L.L.C. and Maiden Lane III L.L.C., were created with loans from the New York Fed to purchase various mortgage-related securities in order to address AIG's capital and liquidity strains. The loans extended by the New York Fed to the Maiden Lane II and III facilities remain outstanding and are being repaid from the assets in those facilities. The fair values of the portfolios well exceed the balances of those loans, according to the Federal Reserve.