The executives at the top of American International Group’s Financial Products unit – largely seen as responsible for the insurer’s near-collapse – will escape any federal charges, according to media reports.

As it works to stabilize its operations and repay billions in federal bailout funding, American International Group reported $1.5 billion in net income through its core insurance business for the first quarter of 2010.

Subjecting property-casualty insurers to bank-style regulation would increase insurance costs for consumers and penalize insurance companies for the sins of other entities within the broader financial services arena, according to an industry economist.

A pair of recent deals has American International Group’s chief executive officer confident that the insurer can repay the government for bailout funds by 2013.

American International Group was victorious in defending a shareholder lawsuit, claiming that current and former executives ignored “red flags” of the company’s near collapse, after a federal judge dismissed the case.

Set to dole out $195 million in bonuses to its current and former employees, American International Group is holding back $21 million owed to employees of its Financial Products unit, according to Reuters.

Employees at American International Group are accepting a bonus reduction of $20 million, nearly a year after their bonuses received national attention, prompting a U.S. House of Representatives’ subcommittee hearing.

The saga of American International Group is one of the biggest stories of the decade, and the implications of its descent and eventual government bailout, to the tune of some $180 billion, are likely to reverberate long into the next decade.