American International Group has repaid the U.S. government its remaining $1.5 billion preferred equity investment as the Obama administration unwinds unpopular bail-out programs used during the financial crisis, the Treasury department said on Thursday.

The government's investment in AIG is now $35.7 billion, down from the $182 billion Treasury and the New York Federal Reserve funneled into the insurer to keep it from collapsing.

(Reporting by Rachelle Younglai)