AIG May Seek to Sell Japan Insurance Units to Help Repay Rescue

American International Group Inc., the insurer selling assets to repay a U.S. rescue, may seek buyers for its Japanese life units as Chief Executive Officer Robert Benmosche reshapes the firm.

The Congressional Oversight Panel and analysts including Suneet Kamath of Sanford C. Bernstein & Co. have said AIG’s Star Life Insurance Co. and AIG Edison Life Insurance Co. may attract interest. The two sales could yield $5 billion, Kamath said last month. Benmosche, hired out of retirement last year, agreed to sell one overseas unit, American Life Insurance Co., known as Alico, and plans to divest another, AIA Group Ltd.

“AIG needs to raise money, it needs to define its core competencies going forward and Star and Edison are saleable properties,” said Clark Troy, an analyst for research firm Aite Group. “It didn’t make sense to sell Alico and sell AIA and keep the Japanese units.”

AIG is scaling back as some rivals are seeking to expand. Prudential Financial Inc., the second-biggest U.S. life insurer, and Canada’s Sun Life Financial Inc. are adding clients and considering acquisitions with the capital accumulated since the financial crisis. MetLife Inc., the No. 1 U.S. life insurer, agreed in March to pay $15.5 billion for Alico.

AIG is considering selling the two Japanese units for about $5 billion, the Wall Street Journal reported yesterday, citing people it didn’t identify.

“Pru is the only thing that makes sense” among potential U.S. acquirers of Star and Edison, said Steven Schwartz, an analyst with Raymond James & Associates Inc. “If you think about it, Met’s a little busy. You’ve got Pru that has significant life-insurance operations in Japan.”

Prudential a ‘Buyer’

Prudential Chief Executive Officer John Strangfeld has said the Newark, New Jersey-based firm is a “buyer.” The company may add to businesses outside the U.S., according to its annual report. Prudential acquired bankrupt Yamato Life Insurance Co. last year adding to operations in Japan, where the company has done business for more than two decades.

“It’s a market we know very well,” Strangfeld said on June 9. “We have confidence in our management there.” Bob DeFillippo, a Prudential spokesman, declined to comment.

AIA operates in faster-growing economies including China while Alico gets most of its revenue in Japan. A deal to sell AIA to London-based Prudential Plc for $35.5 billion faltered this year, and the Treasury Department said AIG may dispose of the unit through a public offering. The sale was to help AIG repay the U.S. government for the $182.3 billion bailout.

To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net.

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