On Wednesday the insurance major, American International Group formalized its plans to pay off the debts of the Federal Reserve Bank of New York. It took the decision to set the stage for the Treasury Department to sell off a major part of its stake in the firm as early as next year beginning.

AIG made a statement in a filing with the regulator that it will use the profits from its recent sale of the American Life Insurance as well as the profit it made from the public offering of ALA group based in Asia in the month of October to pay off its loans that helped AIG to survive in the year 2008.

The company could raise a sum of twenty seven billion dollars from the sale of Alico and the public offering of ALA and covered the twenty billion dollars which AIG owes to the Federal Reserve Bank of New York.

AIG had made a statement that the move will help them to take a step forward in repaying the loans of the taxpayers. Earlier during fall the company chalked out the details of this move.

With the repayment of the Federal Loan AIG will pace the path of the Treasury to begin the process of recovering the huge investment that it did on the global insurance company.

The filing of Wednesday showed that with the deal getting squared up in the coming weeks Treasury will swap its preferred shares in the firm which has a value of forty nine e billion dollars for the amount of one billion and seven million shares of AIG common shares.

The federal government after the transaction will be left with 92.1% ownership stakes in the Insurer going up from the existing 79.8%.