Its payback time for A.I.G. The American insurance giant is selling its Asia insurance business to Prudential PLC, the British insurance major, for $35.5 billion. The sale of the Hong Kong based American International Insurance, or A.I.A., would allow A.I.G. to repay a part of the $180 billion that it got from the US government at the peak of the financial crisis.

According to the Wall Street Journal, the deal would involve $25 billion in cash and $10.5 billion in stock. Almost $16 billion of the proceeds from the sale would be used to buy back the preferred shares in A.I.G. that the government had bought as part of the bailout package. The remaining amount would be used to partially pay the $25 billion outstanding debt that A.I.G. owes to the New York Fed. [Read more…]