AIG's designation as a systemically important financial institution was rescinded by the Financial Stability Oversight Council on Sept. 29 by a 6-3 vote.
In July 2013, the FSOC determined that "material financial distress" at AIG posed a potential threat and warranted closer supervision by the Federal Reserve.
Treasury Secretary Steven Mnuchin said the council worked diligently to re-evaluate AIG, which "demonstrates our commitment to act decisively to remove any designation if a company does not pose a threat to financial stability."
Brian Duperreault, AIG president and CEO, said in a statement that the decision "reflects the substantial and successful derisking that AIG's employees have achieved since 2008. The company is committed to continued vigilant risk management and to working closely with our numerous regulators to enable a strong AIG to continue to serve our clients."
That leaves Prudential Financial as the only firm with the SIFI designation, which subjects firms to more Federal Reserve governance and higher capital requirements. MetLife successfully challenged its designation in court and General Electric's status was rescinded after it sold its financing unit, GE Capital.
Paul Schott Stevens, president and CEO of the Investment Company Institute, said the decision "serves as a reminder of the continuing, critical need to reform how the council operates, and to ensure greater transparency and accountability for its actions."
Dennis Kelleher, president and CEO of non-profit advocacy group Better Markets, called the move "as unwarranted as it is unwise. It is an historic mistake and a slap in the face to the tens of millions of Americans who suffered and continue to suffer from the devastating 2008 financial crash."