AIG sells Asian unit

Marking the struggling firm's most ambitious effort yet to repay its $182.3 billion bailout, American International Group Inc. (AIG), has today agreed to sell its Asian life-insurance business to Prudential PLC. The deal is reportedly worth roughly $35.5 billion.

According to reports from this morning, AIG - the government controlled insurer - has now seen approval from its management board of the sale of American International Assurance Ltd (AIA). Federal Reserve and Treasury Departments officials have also joined the move, signing off on the deal themselves. The Wall Street Journal (WSJ) says that those familiar with the move said it happened on Sunday.

The sale of AIA, which is expected to coincide with a separate agreement anticipated for next week to sell another non-US insurer, American Life Insurance Co., to MetLife Inc, could generate proceeds of about $50 billion for AIG. Half of that amount has already been earmarked for the Federal Reserve Bank of New York.

Taxpayer funds

There has long been pressure on AIG, the single largest recipient of a taxpayer-funded aid during the bailouts, to make repayments. However, despite the prospects of this sale, the firm remains a way off from being able to loosen itself from the government's grasp. In fact, analysts believe that these two deals would only cover roughly half of the $97 billion that AIG is desperate to repay.

And while some analysts are worried that this desperation could blindsight AIG to future deals, US officials are keen on the sale to Prudential because it will create $25 billion cash to repay taxpayers, versus $15 billion they were hoping to get from a planned initial public offering of AIA in coming months.

AIA and Alico are by far the two biggest chunks of AIG that it previously committed to sell as part of its push to pay back US taxpayers, who now own nearly 80 percent of the company. Other sales over the past 14 months fetched a total of $5.6 billion.

Matthew Buttell

Matt Buttell graduated from Bath Spa University in 2006. Since then he has written for several publications, before moving to the web. He now writes solely for the internet, continuing to cover key business issues while managing his own personal blog.

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