MetLife to buy AIG unit for $15.5 bn

: American International Group Inc agreed to sell a division to MetLife Inc for $15.5 billion in the bailed-out company’s second divestiture of a non-US life insurance unit this month.

MetLife will pay $6.8 billion in cash and $8.7 billion in equity securities for American Life Insurance Co, the buyer said on Monday in a statement.

“This is a sizeable transaction,” Robert Haines, an analyst at CreditSights Inc in New York, said in an interview before the deal was announced. “It demonstrates they’re making some tangible progress on their plan to divest assets.”

AIG announced on March 1 that it would sell AIA Group Ltd to Prudential Plc for $35.5 billion. Both the deals this month exceed the sum of more than 20 earlier asset sales announced by New York-based AIG since its September 2008 bailout.

AIG has said that about $9 billion from a sale of Alico would go toward repaying Federal Reserve assistance. AIG previously struck deals to sell a US auto insurer, an Israeli mortgage guarantor and a Canadian life business to help repay loans in its $182.3 billion bailout. Alico operates in more than 50 countries including Japan and parts of Europe, Latin America, the Caribbean and the Middle East.

MetLife plans to sell common stock and senior debt to help finance the cash portion of the deal, the company said. It will also pay AIG with 78.2 million shares of its common stock, which New York-based MetLife values at about $3 billion, the company said. The balance of the equity portion will be paid in $2.7 billion of contingent convertible preferred stock and $3 billion of equity units, MetLife said.

AIG paid down a Federal Reserve credit line by $25 billion in December when it handed over stakes in Alico and AIA. That sum includes $16 billion that AIG promised to the Fed from an eventual AIA sale and $9 billion from an Alico divestiture. The insurer still owed the Fed about $25 billion as of the end of February on the five-year credit line, and more than $40 billion to the Treasury.

The Fed vehicle that controls Alico will sell MetLife securities “over time” after the expiration of minimum holding periods, AIG said in a statement. The Fed also will be entitled to proceeds from the eventual sale of $10.5 billion in securities acquired from Prudential, AIG said last week. AIG advanced 1.7% to...