The FINANCIAL — American International Group Inc. will announce early on March 8 an agreement to sell its foreign life insurance unit to MetLife Inc for about $15 billion in cash and stock, sources familiar with the matter said.
According to Reuters, a deal for the American International Group Inc unit, American Life Insurance Co (Alico), could be announced as soon as Monday, the sources said, declining to be named because it was not yet final.
MetLife's board was expected to meet on Sunday to weigh the transaction, according to the sources, Reuters reports. AIG's board met Friday and gave the task of final approvals to a special committee, which did so on Sunday, the sources said.
For MetLife, the acquisition of Alico will give it instant access to dozens of international markets, according to The New York Times. Alico operates in more than 50 countries, with its largest operations in Japan and Britain. Other operations are in Latin America, the Middle East and other parts of Asia. It is expected to begin significantly adding to MetLife’s earnings per share in 2011, a person briefed on the matter said.
Stock analysts have said they will view MetLife’s foreign expansion favorably, because other big American life insurers like Prudential Financial and Aflac already have significant international presences, the same source reports. Through the sale, A.I.G. will initially hold about an 8 percent stake in MetLife, though it will essentially lack independent voting rights, these people said. As A.I.G.’s preferred shares are converted into common stock over the next few years, that stake could rise to more than 20 percent. The deal is expected to close by the end of 2010, these people said.
The deal would be the second major business sale by AIG in a week and will allow the insurer to repay billions it owes to the U.S. government after a September 2008 rescue, which has since swelled to $182.3 billion, according to Reuters.
The insurer agreed to sell its Asian life insurance unit, American International Assurance (AIA), to Britain's Prudential Plc (PRU.L) last Monday for $35.5 billion, the largest insurance deal ever, the same source reports. AIG, which is nearly 80 percent owned by the U.S. government, declined to comment. MetLife was not immediately available for comment.