AIG is selling its American Life Insurance Company (Alico) business to rival MetLife for $15.5bn (£10.3bn), as part of its continued efforts to pay off its federal bail-out.
MetLife is paying $6.8bn in cash and $8.7bn in shares for Alico, which operates in more than 50 countries. The announcement comes a week after AIG agreed to sell its Asian business AIA to Prudential for $35.5bn.
MetLife is currently the largest life insurer in the US and the purchase of Alico will boost its presence in Japan, the Middle East, Latin America, and central and eastern Europe.
The insurer expects the purchase to increase its 2011 operating earnings per share by $0.45 to $0.55 per share, and enable it to increase its estimated 2011 year-end operating return on equity by 140 to 160 basis points.
"With this acquisition, MetLife is delivering on its strategy to accelerate international expansion as a powerful growth engine for the company," MetLife chief executive Robert Henrikson says.
"Today's transaction will bring together two profitable, complementary, well-established businesses with superb track records and strong long-term growth potential. We expect it will increase MetLife's return on equity and be accretive to operating earnings."
AIG says the sales of both Alico and AIA would give it "greater flexibility" to move forward with its restructuring and rebuilding efforts.
The group is seeking to repay $182.3bn of loans from the US government, comprising an initial bailout of $85bn in September 2008 to prevent its collapse at the height of the turmoil in the global credit markets, which subsequently rose to $182.3bn.
AIG is also looking to repay a $9bn investment in the company made by the Federal Reserve Bank of New York.
