AIG

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After working with MetLife in an effort to sell its American Life Insurance Company (ALICO), the two companies were finally able to strike a deal. For $15.5 billion, AIG will be selling its second-largest foreign life insurance business and in turn, own roughly one-fifth of MetLife.

The Specifics of the Agreement

According to both companies, AIG agreed to sell ALICO for $6.8 billion in cash and $8.7 billion in MetLife equity, which includes common stock and convertible preferred securities. Under this deal, the company would take a stake of about 20 percentin MetLife, which would result in 78.2 million common shares and 6.6 million shares of convertible preferred stock.

The shares that AIG holds would come with voting restrictions, however. The company would not be able to influence MetLife's operations and business decisions. But it would be exposed to MetLife's fortunes for up to two-and-a-half years.

AIG Still Trying to Repay Its Debt

Over the past year, AIG has been working hard to repay U.S. taxpayers for the debt incurred after having the government bail it out twice for a total of nearly $200 billion. Ever since receiving the help, which resulted in the company being nearly 80 percent owned by the government, it has made every effort to reduce its debt.

Recently, it sold its Asia unit to Prudential for $35 billion and it has plans to repay its debt via cash generated by its insurance business and asset sales.

Of course, President Barack Obama is placing some life insurance companies on the hook for a tax that will ensure repayment. With this tax, it is estimated that AIG will be required to pay back $388.8 million. With all of the mistakes that the company has made over the last year, it looks probable that the company is indeed picking up the pieces and moving forward in the right way that will not affect customer life insurance rates.

On Monday, American International Group (AIG) announced that it had reached an agreement to sell its Asian life insurance business to Britain's Prudential PLC. The deal between the two companies is valued at $35.5 billion and is the second deal the insurer has worked out to sell off some of its business, which would in turnpay back taxpayers for its 2008 and 2009 bailouts.

The Deal with Prudential

In its effort to restructure its business and pay back taxpayers, AIG struck the deal to sell its Asianlife insurance business to Prudential. The deal, according to published reports,includes $25 billion in cash.Theinsurer says that this is the largest cash proceeds it has received from any sale during its current restructuring efforts. The money, says Chief Executive Bob Benmosche, will give the company "greater flexibility" as it tries to restructure.

Of the $25 billion in cash, $16 billion will go to the government to buy back preferred shares that were given to it during the bailout. The remaining $9 billion will be used to pay down more than $25 billion outstanding owed to the New York Fed.

Getting Business in Order

AIG has been in the news lately for its attempts to pay taxpayers back after its bailout. Most recently, it has been noted for its decision to sell one of its international insurance units to MetLife for$15 billion. Also, it has recently announced its decision to stop using cash flows from its own life insurance businesses to repay taxpayers, which is something that has probably prompted it to sell these businesses instead.

Since its first bailout in 2008, AIG has been on the fast track to repay its debts. In addition to the tax that Obama plans to impose on insurance companies and banks to repay their debts, we may see announcements from other companies that plan to do the same.

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