US insurance giants American International Group and MetLife were to announce a US$15.5 billion deal yesterday for AIG’s second-largest foreign life-insurance business, the Wall Street Journal reported.
The complex deal would leave AIG owning roughly a fifth of MetLife, the US’ No. 1 seller of life insurance, the paper said, citing unnamed sources.
The two companies were preparing to announce that AIG had agreed to sell American Life Insurance Co, better known as Alico, for US$6.8 billion in cash and US$8.7 billion in MetLife equity, the report said.
Under the deal, AIG would effectively get a stake of about 20 percent in MetLife.
That would make AIG the second-largest shareholder of MetLife, which made it through the financial crisis largely unscathed, the Journal said.
MetLife expects the deal to boost its earnings by US$0.45 to US$0.55 per share by next year, the Journal said. Currently, analysts are estimating MetLife’s operating earnings at US$4.89 per share next year.
AIG chief executive Robert Benmosche, who was previously MetLife’s CEO and remains a shareholder, wasn’t involved in the talks, which were handled by a special committee within AIG, the report said.
A week ago, AIG sold its Asian life-insurer unit, American International Assurance, to Prudential for US$35.5 billion.
With the Alico pact, AIG now expects to return US$32 billion in cash to the Federal Reserve Bank of New York in the coming months, if both deals are completed as scheduled by year-end, the Journal said.
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