Troubled US insurer American International Group (AIG) said Thursday it had agreed to sell two Japanese life insurance units to Prudential Financial for almost five billion dollars.
AIG said the deal to sell the AIG Star Life and Edison Life Insurance Companies was expected to close early next year. The 4.8 billion dollar sale aims to help AIG repay the more than 90 billion dollars it owes US taxpayers from a government bailout during the global financial crisis. AIG, once the world’s largest insurer, is nearly 80 percent owned by the US government.
“The sale of AIG Star and AIG Edison represents another step in AIG’s programme to repay US taxpayers and a key milestone in achieving a complete exit of government support over time,” the company said in a statement. US authorities pumped more than 180 billion dollars into the company during the downturn as it crumbled under the weight of bad bets on mortgage-backed securities and other toxic assets.
AIG said the definitive agreement with Prudential Financial Inc — unrelated to Britain’s Prudential PLC — is made up of 4.2 billion dollars in cash and 600 million dollars in the assumption of third-party debt. AIG Star and AIG Edison offer life, medical and annuity products to individuals and groups and between them have about 10,400 employees. The transaction is subject to customary closing conditions, including regulatory approval, and is expected to close in the first quarter of 2011.
“The AIG Star and AIG Edison companies have been an important part of the AIG family,” said AIG chief executive officer Robert Benmosche.
“Their strength and potential generated significant interest in the capital markets, and given our obligations to the US government, AIG had to consider any resulting bids carefully. In addition to receiving a compelling offer, we are pleased to have found a buyer who unequivocally supports AIG Star’s and AIG Edison’s long-standing commitment to outstanding customer service and innovative product offerings for the benefit of policyholders.”
Prudential Financial said in a separate statement that the policies and rights of Star and Edison customers will not be affected by the transaction.
“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,” said its CEO and chairman John Strangfeld.
Tokyo, Sept 30, 2010 (AFP)
