American International Group Inc’s biggest asset sale since the insurer’s 2008 government bailout reduces pressure on Chief Executive Officer Robert Benmosche to dismantle more of the company.
AIG agreed to sell AIA Group Ltd, a division with more than 20 million customers from China to Australia, to Prudential Plc for $35.5 billion. The New York-based insurer is also in talks with MetLife Inc to sell another non-US life unit, American Life Insurance Co, for about $15 billion, said people with knowledge of the negotiations.
“This diminishes the wrath directed at AIG from Americans angry at the bailout,” said Clark Troy, a senior analyst based in Chapel Hill, North Carolina, for research firm Aite Group. “Benmosche’s not entirely out of the woods, but they’ll owe less to taxpayers. As the pressure on him backs off, people will say this management team is doing a decent job.”
Benmosche, 65, who took over in August, may be done selling large businesses after AIA and Alico are divested to competitors. The CEO halted auctions of a US investment advisory group, a mortgage guarantor and a pair of Japanese life insurers and told shareholders last week that AIG will remain a global property-casualty insurer. AIG will use $25 billion in cash from the AIA sale to pay down a Federal Reserve credit line that expires in 2013. That sum includes $16 billion that AIG committed to the Fed in December from an eventual AIA sale to lower its borrowing.
AIG is accepting the balance of the sale price, $10.5 billion, in Prudential securities.
