AIG sells Alico unit to MetLife

American International Group (AIG) will sell its overseas life and health insurance unit for US$15.5 billion to MetLife Inc, the insurer said, as it attempts to repay billions in government aid.

In the deal announced Monday, MetLife will pay US$6.8 billion in cash, and the rest in stock and equity units.

The cash portion of the sale will be used to reduce a US$47.9 billion investment in AIG by Federal Reserve Bank of New York (FRBNY).

"With this sale of Alico, along with the sale of AIA to Prudential PLC announced last week, we are on track to generate approximately US$50.7 billion from these two transactions alone, consisting of approximately US$31.5 billion in cash to repay the FRBNY, plus another approximately US$19.2 billion in securities that we will sell over time to repay the government," said AIG chairman Harvey Golub.

"Both sales give AIG greater flexibility to move forward with our restructuring and rebuilding efforts."

AIG owes the government almost US$130 billion in bailout funds, including US$47.3 billion owed to the US Treasury and US$34.5 billion in assistance tied to the value of investments the New York Fed bought to prop up AIG.

The deal will give MetLife a larger presence in Japan as well as high-growth markets in Europe, the Middle East and Latin America.

Alico, which operates in more than 50 countries, is the second international unit AIG has sold this month.

On March 1, AIG said it would sell a cornerstone of its business, Asia-based life insurer AIA Group, to Britain's Prudential PLC in a government-approved US$35.5 billion deal.

AIG and MetLife are based in New York.

- AP