May 16 (Bloomberg) -- American International Group Inc., the world's largest insurer, raised its dividend 21 percent, returning to the average rate of increase in the decade before a 2005 probe of its accounting practices.

The quarterly dividend of 20 cents a share applies to holders of record on Sept. 7, the New York-based company said in a statement today. The last increase, declared a year ago, was 10 percent.

The new payout helps distance AIG from an investigation that triggered two earnings restatements and a $1.64 billion settlement with state and federal authorities. In March the company said it planned to boost the dividend about 20 percent a year and buy back as much as $5 billion of its stock in 2007, a record for one year.

The shares, more than $73 before the company got subpoenas about its accounting in February 2005, lost about a third of their value in the ensuing months. Since then, the stock has come within 31 cents of its price before the probe. It rose 39 cents, or .5 percent, to $72.46 in New York Stock Exchange composite trading today.

AIG's first-quarter profit rose 29 percent to $4.13 billion, or $1.58 a share, on growth in its overseas life insurance and property-casualty units.

To contact the reporter on this story: Josh P. Hamilton in New York at jphamilton@bloomberg.net.

Last Updated: May 16, 2007 16:24 EDT