AIG to sell its two Japanese life insurance units to Prudential Financial for US$4.2B as part of company's plan to repay bailout money to U.S. government

Cindy Allen

NEW YORK , September 30, 2010 (Associated Press) – AIG, which reportedly is close to a deal that would allow the U.S. government to exit its ownership interest, says it will sell its two Japanese life insurance units to Prudential Financial Inc. for about $4.2 billion in cash.

The transaction also includes $600,000 in third-party debt, bringing its total value to approximately $4.8 billion, AIG said Thursday.

The sale, which is expected to close in the first quarter, includes AIG Star Life Insurance Co. and AIG Edison Life Insurance Co. and is part of AIG's plan to repay government bailout money. AIG will take a third-quarter charge of about $1.2 billion related to the sale.

"(The units') strength and potential generated significant interest in the capital markets, and given our obligations to the U.S. government, AIG had to consider any resulting bids carefully," CEO Robert Benmosche said in a statement.

AIG was one of the hardest hit financial companies by the credit crisis and received an aid package worth as much as $180 billion. The Wall Street Journal reported Thursday that AIG and federal overseers are finalizing a plan that would allow the insurer to eventually exit from U.S. ownership.

Treasury Department officials couldn't immediately be reached for a comment.

AIG Star and AIG Edison offer life, medical and annuity products to individuals and groups. Prudential Financial said the transaction will not affect customers' policies or rights.

"The addition of these operations to our existing businesses in Japan will increase our presence and give us opportunities to provide our quality service to more customers," Prudential Financial Chairman and CEO John Strangfeld said in a statement.

While AIG is selling the two divisions, the company based in New York said it will still keep and expand its Japanese general insurance business.

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