AIG may sell Japan units for $4.8 billion

NEW YORK: American International Group may reach a deal as soon as today to sell two Japanese life insurance units to Prudential Financial for about $4.8 billion in cash, said people with knowledge of the matter. An agreement would cap two years of intermittent talks for Star Life Insurance and AIG Edison Life Insurance between Prudential chief executive officer John Strangfeld and New York-based AIG, said the people who declined to be identified because the negotiations are private. The transaction under discussion values the units at close to their book value, a measure of assets minus liabilities.

Strangfeld, 56, has been weighing what to do with excess capital he amassed last year by selling stock and bonds and divesting a stake in a securities brokerage. Prudential “is the most overcapitalised life insurance company that we cover,” Randy Binner, an analyst who follows US insurers for FBR Capital Markets, said in the second quarter. “They’re the classic acquirer.”

Bob DeFillippo, a spokesman for Newark, New Jersey-based Prudential, the second-largest US life insurer, declined to comment. AIG’s Mark Herr didn’t immediately return a message seeking comment. AIG CEO Robert Benmosche, 66, is disposing of assets as rival insurers rebuild capital lost during the 2008 financial crisis. In March, he agreed to sell AIG’s American Life Insurance to MetLife, the biggest US life insurer, for about $15.5 billion. Benmosche had called off an attempt in 2009 to divest the Star and Edison units.

The US Treasury Department is in talks with AIG about winding down its stake in the insurer, according to people familiar with the discussions. Benmosche has said he first needs to repay about $19.7 billion in debt on a Federal Reserve credit line before turning to Treasury obligations.