NEW YORK (Bloomberg) — Federal Reserve chairman Ben Bernanke told a congressional panel that he expects American International Group Inc. to repay its federal bailout, sending shares of the insurer temporarily higher.

"Except for AIG, every other major institution has repaid, with interest and dividends," Bernanke told the House Budget Committee yesterday when asked about the Troubled Asset Relief Programme to aid financial firms. "And AIG, I believe, will repay."

AIG gained 97 cents, or 2.8 percent, to $35.28 in morning trading on the New York Stock Exchange. But the stock ended the day down nine cents at $34.22.

The New York- based insurer, recipient of a $182.3 billion bailout, has advanced about 18 percent this year after falling 4.5 percent last year and 97 percent in 2008.

AIG chief executive officer Robert Benmosche is divesting assets to repay bailout funds. He struck a deal in March to sell American Life Insurance Co. to MetLife Inc. for about $15.5 billion and may hold an initial public offering for another non-US life unit, AIA Group Ltd., after the collapse of a $35.5 billion agreement to sell the business to Prudential Plc.

The bailout includes a $60 billion Fed credit line, an investment of as much as $69.8 billion from the Treasury Department and up to $52.5 billion to buy mortgage-linked assets owned or backed by the insurer.

AIG owes about $26.6 billion on the credit line and more than $47 billion to the Treasury. The company returned to profit in the first quarter, posting net income of $1.45 billion.

"I'm confident you'll get your money, plus a profit," Benmosche told the Congressional Oversight Panel in Washington on May 26. "We are a strong, vibrant company."

AIG's rescue may result in a $45.2 billion loss, based on March 31 data, Treasury said May 21. That compares with a previous loss estimate of $48.1 billion from November 2009.