The insurer, which received a total of $182 billion from the government during the crisis, paid down what it owed in a special purpose vehicle called AIA Aurora more than one year ahead of schedule.

The repayment will free up AIG's collateral against AIA Aurora, which was set up in December 2009 in exchange for a reduction in the debt that AIG owed the New York Fed at the time.

The U.S. Treasury's current total investment in AIG is now $35.7 billion while the New York Federal Reserve's loan to the company is valued at $9 billion.

In March alone, the Treasury has recovered more than $14.6 billion on its investment in AIG, including the $6 billion from its sale of AIG stock, the department said. The U.S. government still holds a 70 percent stake in the company.

(Reporting by Rachelle Younglai, editing by Jan Paschal, Gary Crosse)

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