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AIG sells Asia insurance unit to Brits for $35.5 billion -- biggest taxpayer repayment so far

Here's a nice change: A news story that includes AIG and lots of money but does NOT include executive bonuses.

AIG, which is 80 percent owned by U.S. taxpayers after its epic fail nearly brought down the global financial system in 2008, sold its Asia insurance unit to U.K.-based Prudential PLC for $35.5 billion. (The company is not related to the U.S.-based Prudential Financial.)

AIG's Asia unit is based in Hong Kong and is called American International Insurance. (AIG is a massive holding company that cobbled together several businesses over the years. The company was brought down by its London-based Financial Products division, which sold more derivatives than the insurance businesses could back. AIG's insurance businesses are in pretty good shape.)

The sale will account for the biggest repayment so far of the $182 billion in taxpayer money given or promised to AIG.

The deal breaks down like this, according to AIG: The company will receive $25 billion in cash, $8.5 billion in face value of equity and equity-linked securities and $2 billion in face value of preferred stock of Prudential, subject to closing adjustments.

The New York Fed will get the $25.5 billion in cash, and AIG will convert the Prudential shares into cash and give those to the Fed.

"In considering two viable, very attractive alternatives to successfully monetize AIA, including an initial public offering, we decided that a sale to Prudential enables AIG to realize value on a faster track to repay U.S. taxpayers," said AIG President Bob Benmosche, in a statement. "This transaction, the most significant milestone to date in our ongoing effort to repay taxpayers, also gives us greater flexibility to move forward with AIG's restructuring and focus on enhancing the value of our key insurance businesses, which will benefit all stakeholders."

Take a look at ProPublica's scorecard on AIG's piece of the government bailout pie by clicking here. The government committed itself to giving AIG up to $182 billion if it needed it. So far, the government has promised $70 billion and given it $45 billion.

Last month, The Post reported that AIG was planning another round of executive bonuses -- this round worth $100 million.

Also last month, AIG reported that it lost $8.9 billion in the fourth quarter of 2009.

Follow me on Twitter at @theticker

By Frank Ahrens  |  March 1, 2010; 12:24 PM ET
Categories:  Bailout , Corporations , The Ticker  | Tags: AIG, Prudential P.L.C., bailout  
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