Beleaguered insurance giant American International Group announced on Monday that it would sell its international insurance unit in order to more quickly pay back the U.S. government, which loaned the company billions of dollars to keep it from succumbing to the recession.
AIG will sell its American Life Insurance Company, or ALICO as it is more commonly known, to New York-based insurer MetLife Inc. for $15.5 billion, according to the company.
"This sale is an important step toward repaying the government," Harvey Golub, chairman of AIG, said in a statement.
The insurance giant currently owes the federal government roughly $132 billion after taxpayers stepped in to save the company from bankruptcy in the midst of the financial crisis.
The deal will provide AIG with $6.8 billion in cash and the rest in stock options. The stock options will give AIG at least a 20 percent stake in the MetLife, making it the second largest shareholder of the company.
The deal comes on the heels of another sale by AIG of one of its international units. Earlier this month, AIG sold its Asian life insurance unit to a British company for $35.3 billion.
"Both sales give AIG greater flexibility to move forward with our restructuring and rebuilding efforts, and focus on enhancing the value of our key insurance businesses," Golub said in a statement.
The deal will bolster AIG rival MetLife, which will gain a footing in growing markets in Asia, Europe, the Middle East and Latin American. The company is estimating that its overseas profits will swell from 15 percent to 40 percent after the deal is finalized. MetLife is already the largest seller of insurance in America, and the deal, which is expected to be finalized by the end of the year, will allow the company to grow its international portfolio.
AIG has been bleeding money recently. In its fourth quarter filing, the company said that it lost $8.9 billion, which it attributed to its selling of large stakes in its business in an effort to pay back taxpayers.