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 in $15.5 billion unit sale to MetLife

By Blake Ellis, staff reporter

NEW YORK (CNNMoney.com) -- AIG agreed Monday to sell its American Life Insurance Co. unit to MetLife Inc. for $15.5 billion in cash and stock, in beleaguered AIG's second sale of an international unit in a week.

AIG said it will sell the unit, known as Alico, for $6.8 billion in cash and the remainder in MetLife equity. The deal leaves AIG as the second-largest shareholder of MetLife, with a stake of more than 20% in the company.

Selling Alico, one of its largest international life insurance businesses, will allow government-controlled AIG to take yet another step in repaying the nearly $132 billion it borrowed from the federal government beginning in 2008 to avoid collapse.

Expected to close by the end of the year, the companies said the acquisition will also help MetLife, the largest seller of life insurance in the United States, grow internationally and especially target Japan.

The deal came a week after AIG announced an agreement to sell its Asian life insurance business, American Insurance Assurance Ltd (AIA), to Britain's Prudential PLC in a deal valued at $35.5 billion, including $25 billion in cash.

AIG said it expects to generate about $50.7 billion from these two transactions, including approximately $31.5 billion in cash to repay the New York Federal Reserve Bank and another $19.2 billion in securities that it will sell over time to repay the government.

"This sale is an important step toward repaying the government," Harvey Golub, chairman of AIG, said in a statement. "Both sales give AIG greater flexibility to move forward with our restructuring and rebuilding efforts, and focus on enhancing the value of our key insurance businesses."

At the end of February, AIG announced a loss of $8.9 billion in the fourth quarter of 2009, which it said was largely due to the costs associated with selling off large stakes in its insurance businesses to reduce the debt it owes to taxpayers.

In December, AIG sold stakes in AIA and Alico 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 agreement last quarter.

The deal for Alico has been approved by the boards of both AIG and MetLife, and is subject to regulatory approvals in the United States and overseas. To top of page

Search for Jobs

Index Last Change % Change
Dow 18,167.11 4.76 0.03%
Nasdaq 5,257.29 15.46 0.29%
S&P 500 2,142.51 1.17 0.05%
Treasuries 1.74 -0.01 -0.52%
Data as of 3:09pm ET
Company Price Change % Change
Reynolds American In... 54.05 6.88 14.59%
Chesapeake Energy Co... 6.68 -0.24 -3.40%
Microsoft Corp 59.85 2.60 4.54%
AT&T Inc 37.38 -1.27 -3.29%
General Electric Co 28.92 -0.14 -0.50%
Data as of 2:54pm ET


Wells Fargo's vast network of branches hasn't buckled much in recent years. But that may not change, experts say. More

Passes for the new National Museum of African-American History and Culture in Washington D.C. are 'sold out' through March 2017. More

Microsoft stock is soaring thanks to investments in cloud computing, a new approach to Office and a little financial engineering. More

The University of Illinois partnered with Coursera to launch one of the most affordable online MBA programs yet. More