Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

AIG selling Asia unit to Prudential for $35 billion



NEW YORK (CNNMoney.com) -- AIG said Monday that it had reached a definitive agreement to sell its Asian life insurance business to Britain's Prudential PLC in a deal valued at $35.5 billion.

The deal includes $25 billion in cash, which AIG says is the largest cash proceeds it's received from any sale during its current restructuring efforts.

Negotiations were first reported on Sunday by The Wall Street Journal's online edition, which said that AIG (AIG, Fortune 500) was closing in on the sale of American Insurance Assurance Ltd. (AIA) to the British company.

AIG Chief Executive Bob Benmosche said in a statement that the deal will allow AIG "to realize value on a faster track to repay U.S. taxpayers" and will give the company "greater flexibility" with its restructuring plans.

AIA "represents a unique and strategically compelling opportunity" to create the leading insurer in South East Asia," Prudential said in a statement released early Monday.

Under the terms of the deal, AIG plans to pay $16 billion of the cash component back to the government to buy back preferred shares given in the bailout.

The remaining $9 billion in cash will be used to pay down the more than $25 billion outstanding under a credit facility from the New York Fed.

Shares of AIG rose 8% in premarket trading.

The deal marks yet another step in getting AIG out from the nearly $132 billion it borrowed from the federal government beginning in 2008 to avoid collapse.

AIA markets life insurance throughout Asia and the South Pacific. AIG has said AIA has about 20 million customers throughout the region.

On Friday, AIG announced it lost $8.9 billion in the fourth quarter of 2009, largely due to costs associated with selling off large stakes in its insurance businesses to reduce the debt it owes to taxpayers.

The majority of AIG's fourth-quarter loss came from its December sale of large stakes in AIA and Alico, another foreign life insurance businesses, to the U.S. government. In exchange for those transactions, the Fed reduced the amount AIG has to repay taxpayers by $25 billion. AIG said it took a $5.2 billion charge for that sale last quarter. To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.40%3.39%
15 yr fixed2.68%2.67%
5/1 ARM2.89%2.84%
30 yr refi3.42%3.41%
15 yr refi2.69%2.69%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 18,400.88 -53.42 -0.29%
Nasdaq 5,213.22 -9.77 -0.19%
S&P 500 2,170.95 -5.17 -0.24%
Treasuries 1.57 -0.00 -0.13%
Data as of 6:15pm ET
Company Price Change % Change
Bank of America Corp... 16.14 0.03 0.16%
EMC Corp 28.99 0.00 0.00%
Chesapeake Energy Co... 6.35 -0.16 -2.46%
General Electric Co 31.24 -0.13 -0.41%
Freeport-McMoRan Inc... 10.29 -0.27 -2.56%
Data as of 4:02pm ET
Sponsors

Sections

Martin Shkreli, the reviled drug company CEO who faces federal criminal charges, nearly doubled his $3 million investment in KaloBios. More

Brazil's economy contracted 3.8% in the second quarter. The economic news came hours before Brazil's senate impeached President Dilma Rousseff. More

Instagram introduced a zoom functionality on Wednesday to iOS users. It'll roll out to Android users in the coming weeks. More

The country's most expensive housing markets have appreciated at a much faster clip than homes in the least expensive markets, according to Trulia. More