Nov. 10 (Bloomberg) -- American International Group Inc., the insurer bailed out by the U.S., will be able to repay its Federal Reserve credit line and “much or all” of the Treasury Department’s investment if financial markets stabilize, Moody’s Investors Service said. The company gained 3.9 percent in New York trading.

The U.S. is “committed to working with the firm to maintain its ability to meet obligations as they come due throughout the restructuring process,” Moody’s said yesterday in a statement, maintaining its credit ratings on the New York- based insurer. AIG owed more than $44 billion on the credit line as of last week and has tapped more than $40 billion from Treasury facilities.

AIG posted third-quarter net income of $455 million last week, the insurer’s second straight profitable period, on lower investment losses. Chief Executive Officer Robert Benmosche has halted sales of an investment-advisory unit and Japanese life insurers to build value in the assets.

“The slower approach to restructuring could help AIG to generate more favorable values from its business portfolio than would be the case under rushed asset sales,” Moody’s said.

AIG advanced $1.41 to $37.59 at 4:15 p.m. in New York Stock Exchange composite trading. The insurer has gained about 20 percent this year.

A decline in the value of AIG’s assets could impair the company’s ability to repay obligations and lead to downgrades, Moody’s said.

AIG’s Borrowing

AIG tapped a Treasury facility for another $4.2 billion to help restructure its money-losing mortgage guarantor and the plane unit it’s trying to sell, the insurer said last week in a regulatory filing. The insurer accessed about $2.1 billion from its Treasury facility on Aug. 13 and said on Nov. 6 it would draw down another $2.1 billion. AIG got the $29.8 billion facility in April as part of its fourth bailout.

The company has placed its two biggest non-U.S. life insurance units, American International Assurance Co. and American Life Insurance Co., into special-purpose vehicles to pay down its Fed debts by $25 billion. The transactions, to be completed by yearend, will cause a pretax charge of $5 billion, AIG said.

The insurer’s $182.3 billion rescue includes a $60 billion Federal Reserve credit line, a Treasury Department investment of as much as $69.8 billion, and up to $52.5 billion to buy mortgage-linked assets owned or backed by the company.

To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net

Last Updated: November 10, 2009 16:46 EST