Being an investor in struggling insurance titan American International Group is finally providing Uncle Sam with some upside.

The company, which is 80 percent owned by taxpayers after the US government injected $182.5 billion into it, reported its first quarterly profit in seven quarters, as some of the securities that got it into trouble started to regain some value.

AIG said it posted a second-quarter profit of $1.8 billion, vs. a year-earlier loss of $5.36 billion, driven largely by narrowing writedowns on investment losses.

Meanwhile, AIG also said it’s continuing its controversial practice of paying bonuses to retain key employees, saying it will spend $1.1 billion in bonuses through 2011. The insurer ignited a firestorm earlier this year when it emerged that the company shelled out millions to executives in the division responsible for the company’s near-collapse.

News of AIG finally returning to the black sent the company’s shares soaring, and capped off a week when the insurer’s stock has doubled in value. Shares yesterday closed up 20 percent, or $4.61, to $27.14.

On Monday, AIG’s shares closed at $13.14 a share, meaning just this week Uncle Sam netted more than $7 billion from its investment. However, the stock is still off from May, when it topped $40 a share.

The surprising turn of events comes less than a year after AIG required huge sums of federal cash to prevent a collapse that most experts said would have been calamitous for the financial system.

Although the market met AIG’s surprise profit with applause, some analysts remain cautious, warning that the gain was due in large part to improved market conditions rather than a fundamental shift in the business.