The insurance company said it will pay investors a quarterly dividend of 10 cents per share and will repurchase $1 billion worth of its own common stock.
AIG (Fortune 500) shares rose 6% in premarket trading. The stock gained more than 5% in after hours trading Thursday. ,
"The successful turnaround of AIG has been remarkable," said Robert Miller, chairman of AIG's board."We are pleased that we have gained sufficient capital adequacy that we can return a portion of our success directly to our shareholders through these actions."
Once the largest insurance company in the world, AIG was brought to its knees by massive losses on insurance contracts it wrote against mortgage-backed securities that soured when the housing bubble burst. The company was ultimately rescued by the government in 2008, and received more than $180 billion in bailout money.
AIG repaid its government loans with interest in 2011, resulting in a profit for the U.S. Treasury Department.
Also on Thursday, AIG reported quarterly results that topped analysts' expectations.
The company earned $2.7 billion, or $1.84 per share, in the second quarter. That's up from $2.3 billion, or $1.33 per share, in the same period last year.
Chief executive Robert Benmosche said the results illustrate AIG's renewed focus on "core insurance operations" and the steps the company has taken to clean up its balance sheet.
In particular, he said AIG's property casualty, life retirement and mortgage insurance business all posted strong results.
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