its biggest move yet to repay a $182.3 billion U.S.-government bailout, American International Group Inc. agreed to sell its
crown-jewel Asian life-insurance business to Prudential PLC for about $35.5 billion.
of the deal call for Prudential to pay the government-controlled insurer $25
billion in cash, $8.5 billion in equity and equity-linked securities and $2
billion in preferred stock for its American International Assurance Ltd. unit,
the companies said in statements Monday. That means AIG will be left with a big
stake in Prudential, a medium-size U.K. life-insurance and asset-management
said that over time it would sell the $10.5 billion of Prudential securities it
is getting in the deal, subject to minimum holding periods it didn’t detail in
the statement. That cash will be used to repay any borrowings outstanding under
a credit facility with the New York Federal Reserve Bank.
sale of AIA—along with a separate agreement expected in the next week or so to
sell another non-U.S. insurer, American Life Insurance Co., to MetLife Inc.—could ultimately generate proceeds of
about $50 billion. Half of that amount has already been earmarked for the New
was the single largest recipient of a taxpayer-funded aid in the bailout. The
company remains far from weaning itself from the government lifeline it
received in 2008. These two deals would cover roughly half the $97 billion AIG
is trying to repay the U.S. government.
officials like the Prudential deal because it will generate $25 billion in cash
to repay taxpayers, versus $15 billion they were hoping to get from an initial
public offering of AIA, planned for the coming months on the Hong Kong Stock Exchange.