American International Group (AIG) has agreed to sell a division to MetLife 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 (Alico), the buyer said today in a statement.
AIG announced on March 1st it would sell AIA Group Ltd. to Prudential 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 car 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.
The acquisition will add 45 cents to 55 cents a share to MetLife's 2011 operating earnings, the company said. MetLife expects transition costs and other expenses of 12 cents a share, which won't be deducted from operating earnings, the insurer said. The Alico sale is expected to be completed by the end of 2010, AIG said.
Alico has more than 20 million customers and 12,500 employees and posted $1.3 billion in after-tax operating income in 2008, AIG said today. The business had $89 billion in assets under management as of the end of 2008.
Bloomberg