AIG sells Alico assemblage to MetLife for $15.5 billion

CHARLOTTE, N.C. – American All-embracing Group Inc. said Monday it will advertise its American Activity Allowance Co. analysis for $15.5 billion to MetLife Inc. The government-approved deal, AIG's added big asset auction in two weeks, will accord the insurer added banknote to accord the billions of bailout dollars it still owes the government.

The acquirement expands MetLife's attendance in Japan and high-growth markets in Europe, the Middle East and Latin America. American Activity Insurance, accepted as Alico, operates in added than 50 countries. MetLife currently offers casework in 17 countries.

It additionally moves AIG afterpiece to repaying taxpayers. As of Dec. 31, the aggregation owed the Treasury and the Federal Reserve Bank of New York about $130 billion. AIG's bailout amalgamation was originally account up to $182.5 billion.

On March 1, AIG agreed to advertise Asia-based activity insurer, AIA Group, to Britain's Prudential PLC for $35.5 billion. The two units, while affairs agnate products, don't accomplish in the aforementioned markets in Asia.

Investors were admiring with the Alico deal, and bid AIG's shares up 3.6 percent, or 94 cents, to $29.02 in afternoon trading. MetLife shares rose $1.54, or 4 percent, to $40.47.

MetLife will pay $6.8 billion in banknote for Alico. The blow of the acquirement amount will be paid in banal and what are alleged disinterestedness units, which are eventually convertible to accepted banal and adopted securities

AIG will initially authority an 8 percent pale in MetLife. Its pale will ability 14 percent in aboriginal 2011 afterwards some MetLife adopted shares are adapted into accepted shares. The pale could ability up to 20 percent, afterwards the insurer receives $3 billion in disinterestedness units.

"Rarely does one appear beyond a accord that has such a able cardinal fit," MetLife CEO Robert Henrikson said in an account with The Associated Press.

Henrikson said MetLife has been in the bazaar for assorted calm and across acquisitions over the accomplished bristles years. He said he began discussing a accessible Alico accord with AIG in December 2008, three months afterwards the government bailout.

AIG and MetLife are based in New York. Robert H. Benmosche, the above arch of MetLife, became AIG's CEO in August. Benmosche wasn't complex in the accord discussions, Henrikson said. All talks were handled by a appropriate board aural AIG, he said.

The Alico deal, while acceptable for MetLife, carries some risk, said Aite Group chief analyst Clark Troy.

"Japan is an crumbling association and MetLife may face challenges growing revenue," Troy said. "However, MetLife does accept the bureau and bureau and acquaintance to accomplish the accord work, as they will be architecture on one of their stronger franchises."

MetLife currently has a acknowledged capricious accomplishment business in Japan.

MetLife's all-embracing business grew decidedly in 2005 back the aggregation acquired best of Citigroup's all-embracing allowance businesses, abacus Japan, Australia and Britain to its portfolio. Before then, MetLife already had operations in South Korea, Chile and in Mexico, area it is the better activity insurer.

Henrikson said he didn't accede a acquirement of AIA Group because "it didn't fit MetLife's advance plans."

AIG has been alive for the accomplished year and bisected to advertise assets and accumulate operations so it can accord its government debt. Since accepting government bailout funds, AIG has completed 21 assemblage sales or asset transactions, including the Alico and AIA deals.

As the better almsman of aborigine bailout dollars, AIG charcoal beneath the administration of Treasury and the New York Fed. All negotiations about Alico and AIA were monitored actively by assembly from Treasury and the New York Fed, admiral from both agencies said.

Each bureau has alternate in every key alarm and affair amid admiral about the deals, and discussed the accessible options with AIG's executives, according to admiral accustomed with the process. They batten on action of anonymity because they were not accustomed to about altercate the negotiations.

AIG's abutting key auction could be Nan Shan, a Taiwanese company, analysts accept said.

AIG is additionally continuing to abode allotment needs and analyze options for restructuring its aircraft leasing unit, All-embracing Lease Finance Corp., and its customer and bartering lending business, American General Finance Inc.

It is additionally believable that AIG ability accede sales of its American General Activity and American General Activity and Accident units, Aite Group's Troy said.

The insurer is accepted to accumulate Chartis, its beyond acreage and blow allowance company; two added Japanese activity insurers, and a scattering of smaller, U.S.-based companies. They are actual absurd to be sold, according to a Treasury official. He said the afterwards AIA, Alico and Nan Shan, the actual pieces will acceptable be retained by "new AIG."

The banknote allocation of the Alico and AIA deals will be acclimated anon to pay bottomward an advance in AIG by the Federal Reserve Bank of New York. The disinterestedness allocation of the deals will be awash over time to advice added accord that debt.

Including the latest sale, AIG will be able to carve its government debt by about $51 billion, or 39 percent. Before the sales of AIA and Alico, AIG owed the government $94.76 billion in loans and its outstanding government abetment totaled $129.26 billion.

All the banknote and banal AIG accustomed from affairs Alico to MetLife will be acclimated to accord the government.

AIG accustomed $25 billion in banknote from the AIA auction and addition $10.5 billion in banal and disinterestedness units. Like in the Alico sale, that banal and disinterestedness will eventually be awash to accord the government.

AIG's outstanding government debt will be about $78.26 billion already the two deals are completed and the banal and disinterestedness units in MetLife and Prudential are awash — bold accepted bazaar ethics for the MetLife and Prudential stakes.

Of that $78.26 billion, AIG will owe the government $43.76 billion.

The actual $34.5 billion in outstanding abetment is angry to the amount of investments the government bought from AIG. As those investments pay off or acceleration in value, the government recoups added money.

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AP Business Writers Stephen Bernard in New York and Daniel Wagner in Washington, D.C. contributed to this story.

 

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