AIG sells Asian assets to Prudential for $35.5 billion

The American International Group, Inc. (AIG),the stricken insurance and financial services firm, yesterday announced a definitive agreement for the sale of its Asian assets, the AIA Group Limited (AIA), to Britain's largest insurer Prudential Plc. for approximately $35.5 billion.

The deal includes $25 billion in cash, $8.5 billion in face value of equity and equity-linked securities, and $2.0 billion in face value of preferred stock of Prudential, AIG said.

The combination will create an unrivalled life insurance powerhouse in Asia, one of the world's fastest growing markets.

The cash portion of the proceeds from the sale will be used to redeem preferred interests with a liquidation preference of approximately $16 billion held by the Federal Reserve Bank of New York (FRBNY) in the special purpose vehicle formed to hold the interests in AIA, and to repay approximately $9 billion under the bank's credit facility.

AIG intends to monetise the $10.5 billion in face value of Prudential securities over time, subject to market conditions.

All net cash proceeds from the monetisation of these securities will be used to repay any outstanding debt under the FRBNY credit facility, the American insurance giant said.