The Treasury is planning to begin converting its $49 billion preferred stake into common stock for sales, Bloomberg News said without naming its sources. The plan could be announced this week.
AIG is currently working on selling two international units, AIA and American Life Insurance Co., that would let the company repay its credit line with the Federal Reserve.
AIG currently has a $182.3 billion lifeline from the public sector, including a Treasury investment worth as much as $69.8 billion.
The company, once the world's largest insurer, had to turn to the federal government as problems related to its security-guaranteeing business mounted. As the value of securities, including credit default swaps, fell, AIG losses mounted up and it had to post more and more collateral.
These impacted the company's creditworthiness, forcing it to post yet more collateral.
Eventually, the Federal Reserve stepped in to aid the company in September 2008. The bailout has been revised three times since then.