Don't miss

Replay


LATEST SHOWS

#TECH 24

Station F: Putting Paris on the global tech map

Read more

THE INTERVIEW

Davos 2017: 'I believe in the power of entrepreneurs to change the world'

Read more

FRANCE IN FOCUS

French education with a difference: Teachers who think outside the box

Read more

#THE 51%

Equality in the boardroom: French law requires large firms to have 40% women on boards

Read more

FASHION

Men's fashion: Winter 2017/2018 collections shake up gender barriers

Read more

ENCORE!

Turkish writer Aslı Erdoğan speaks out about her time behind bars

Read more

REVISITED

Video: Threat of economic crisis still looms in Zimbabwe

Read more

BUSINESS DAILY

DAVOS 2017: Has the bubble burst?

Read more

BUSINESS DAILY

DAVOS 2017: Summit overshadowed by geopolitical changes

Read more

Business

AIG sells overseas unit to insurance giant MetLife

Text by News Wires

Latest update : 2010-03-08

In a deal that will help AIG raise funds to pay back part of its government bailout, US insurance giant MetLife will take over American Life Insurance Company (ALICO), an overseas unit of AIG, in a deal worth 15.5 billion dollars.

AFP - US life insurance giant MetLife will acquire a unit of American International Group in a 15.5-billion-dollar deal that will help AIG pay back part of its government bailout, the firms said Monday.

MetLife will take over American Life Insurance Company (ALICO) in a deal that will comprise 6.8 billion dollars in cash plus some 8.7 billion dollars in MetLife stock, they said in separate statements.

The stock portion of the purchase will consist of 78.2 million shares of MetLife common stock valued at three billion dollars, and the rest in convertible preferred stock and equity units.

The deal would leave AIG owning about 20 percent of MetLife, according to The Wall Street Journal.

AIG said the cash portion of the proceeds from the sale will be used to reimburse the Federal Reserve Bank of New York (FRBNY), which helped bail out the company during the global financial crisis.

"This sale is an important step toward repaying the government," said Harvey Golub, chairman of the AIG board of directors.

He said that with the sales of ALICO and the Asian unit AIA to Prudential, which was announced last week, the company was on track to generate approximately 50.7 billion dollars from these two transactions alone.

Approximately 31.5 billion in cash will be used to repay the FRBNY, while another approximately 19.2 billion dollars in securities will be sold over time to pay back the federal government.

AIG neared collapse in September 2008, unable to meet its obligations for contracts written to insure mortgage securities and related assets without sufficient capital.

The Federal Reserve, fearing a shock to the global financial system in the event of an AIG default, provided a loan of 85 billion dollars to AIG in September 2008 in what would be the first portion of a staggering bailout worth some 180 billion dollars, some of which came from the Troubled Asset Relief Program (TARP).

For its part, MetLife said the transaction would increase its 2011 operating earnings per share by approximately 0.45 to 0.55 dollars per share.

"With this acquisition, MetLife is delivering on its strategy to accelerate international expansion as a powerful growth engine for the company," MetLife chief executive Robert Henrikson said in a statement.

"Today's transaction will bring together two profitable, complementary, well-established businesses with superb track records and strong long-term growth potential," he added.

"We expect it will increase MetLife's return on equity and be accretive to operating earnings."

Founded in 1921, ALICO has 12,500 employees in more than 50 countries and 20 million customers worldwide.

MetLife said the transaction also includes ALICO's global benefits network serving US and foreign multinational corporations.

The transaction has been approved by the boards of directors of both MetLife and AIG, and is expected to close by the end of 2010.

Date created : 2010-03-08

  • INSURANCE

    AIG sells Asian arm to UK's Prudential for $35 billion

    Read more

  • FINANCE

    Outrage as bailed-out AIG pays 100 million dollars in bonuses

    Read more

  • USA

    AIG to sell Taiwan life insurer for 2.2 billion dollars

    Read more

COMMENT(S)