AIG sells Alico to MetLife in 2nd major deal
Source: Agencies |
March 9, 2010, Tuesday
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Print Edition
Print Edition
AMERICAN International Group will sell a second overseas life and health insurance unit for US$15.5 billion to MetLife Inc in an ongoing bid to repay billions in United States government aid.
It was the second major deal AIG completed this month to raise cash. On March 1, AIG agreed to sell Asia-based life insurer AIA Group to Britain's Prudential Plc for US$35.5 billion.
MetLife will get a much larger presence in Japan as well as high-growth markets in Europe, the Middle East and Latin America. Alico operates in more than 50 countries.
In the deal announced yesterday, MetLife will pay US$6.8 billion in cash for Alico. The rest will be paid in stock and equity units.
The cash portion will be used immediately to pay down an investment in AIG by the Federal Reserve Bank of New York. The equity portion of the deal will be sold over time to help further repay that debt.
"Both sales give AIG greater flexibility to move forward with our restructuring and rebuilding efforts," said AIG Chairman Harvey Golub.
Including the latest sale, AIG will be able to slash its government debt by US$50.7 billion, or 39 percent. Before the sales of AIA and Alico, AIG owed the government US$94.76 billion in loans and its outstanding government aid was US$129.26 billion.
All the cash and stock AIG received from selling Alico to MetLife will be used to repay the government.
AIG received US$25 billion in cash from the AIA sale and another US$10.5 billion in stock and equity units. Like in the Alico sale, that stock and equity will eventually be sold to repay the government.
AIG's outstanding government debt will be around US$78.56 billion once the two deals are completed and the stock and equity units in MetLife and Prudential are sold - assuming current market values for the MetLife and Prudential stakes.
Of that US$78.56 billion, AIG will owe the government US$44.06 billion.
The remaining US$34.5 billion in outstanding aid is tied to the value of investments the government bought from AIG.
It was the second major deal AIG completed this month to raise cash. On March 1, AIG agreed to sell Asia-based life insurer AIA Group to Britain's Prudential Plc for US$35.5 billion.
MetLife will get a much larger presence in Japan as well as high-growth markets in Europe, the Middle East and Latin America. Alico operates in more than 50 countries.
In the deal announced yesterday, MetLife will pay US$6.8 billion in cash for Alico. The rest will be paid in stock and equity units.
The cash portion will be used immediately to pay down an investment in AIG by the Federal Reserve Bank of New York. The equity portion of the deal will be sold over time to help further repay that debt.
"Both sales give AIG greater flexibility to move forward with our restructuring and rebuilding efforts," said AIG Chairman Harvey Golub.
Including the latest sale, AIG will be able to slash its government debt by US$50.7 billion, or 39 percent. Before the sales of AIA and Alico, AIG owed the government US$94.76 billion in loans and its outstanding government aid was US$129.26 billion.
All the cash and stock AIG received from selling Alico to MetLife will be used to repay the government.
AIG received US$25 billion in cash from the AIA sale and another US$10.5 billion in stock and equity units. Like in the Alico sale, that stock and equity will eventually be sold to repay the government.
AIG's outstanding government debt will be around US$78.56 billion once the two deals are completed and the stock and equity units in MetLife and Prudential are sold - assuming current market values for the MetLife and Prudential stakes.
Of that US$78.56 billion, AIG will owe the government US$44.06 billion.
The remaining US$34.5 billion in outstanding aid is tied to the value of investments the government bought from AIG.
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