AIG Enters into Agreement to Sell Star and Edison Life Companies

Insurance Weekly News
October 7, 2010

American International Group, Inc. (AIG) announced a definitive agreement to sell its Japan-based life insurance subsidiaries, AIG Star Life Insurance Co., Ltd. ("AIG Star") and AIG Edison Life Insurance Company ("AIG Edison"), to Prudential Financial, Inc., for a total purchase price of $4.8 billion, comprising $4.2 billion in cash and $0.6 billion in the assumption of third-party debt. AIG will retain and continue to grow its general insurance business in Japan.

"The AIG Star and AIG Edison companies have been an important part of the AIG family. Their strength and potential generated significant interest in the capital markets, and given our obligations to the U.S. government, AIG had to consider any resulting bids carefully," said Robert Benmosche, AIG Chief Executive Officer. "In addition to receiving a compelling offer, we are pleased to have found a buyer who unequivocally supports AIG Star's and AIG Edison's long-standing commitment to outstanding customer service and innovative product offerings for the benefit of policyholders."

The sale of AIG Star and AIG Edison represents another step in AIG's program to repay U.S. taxpayers and a key milestone in achieving a complete exit of government support over time.

AIG Star and AIG Edison offer life, medical and annuity products to individuals and groups through their captive agent, independent agent, corporate and bancassurance channels. Together, the companies have approximately 10,400 employees, including about 7,800 company career agents, as well as 5,500 independent agents.

Goldman, Sachs & Co. and J.P. Morgan Securities LLC acted as financial advisors and Simpson Thacher & Bartlett LLP and Nagashima Ohno & Tsunematsu served as legal advisors to AIG on this transaction.

The transaction is subject to the satisfaction of customary closing conditions, including receipt of regulatory approval, and is expected to close in the first calendar quarter of 2011.

As a result of the sales agreement, AIG expects to take a non-cash pretax goodwill impairment charge of approximately $1.2 billion in the third quarter.

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