US insurance giants American International Group and MetLife will announce a $15.5-billion deal on Monday for AIG's second-largest foreign life-insurance business, The Wall Street Journal reported.
The complex deal would leave US government-controlled AIG owning roughly a fifth of MetLife, the nation's number one 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 $6.8 billion in cash and 8.7 billion in MetLife equity, the report said.
Under the deal, AIG would effectively get a stake of about 20 per cent in MetLife.
That would make AIG, which is nearly 80 per cent owned by the US government, 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 45 cents to 55 cents per share by 2011, The Journal said. Currently, analysts are estimating MetLife's operating earnings at $4.89 per share in 2011.
AIG Chief Executive Robert Benmosche, who was previously MetLife's CEO and remains a shareholder, wasn't involved in the deal 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 $35.5 billion.
With the Alico pact, AIG now expects to return 32 billion dollars in cash to the Federal Reserve Bank of New York in the coming months, if both deals close as scheduled by year-end, The Journal noted.
Another 19 billion is likely to be returned over the next few years when AIG's large stakes in Prudential and MetLife are sold, the paper added.