AIG set to sell Fuji Life in Japan to Li's Pacific Century

[NEW YORK] American International Group Inc agreed to sell the Fuji Life Insurance business in Japan to FWD Group, an arm of Richard Li's Pacific Century Group.

AIG will continue to offer property-casualty coverage in Japan, according to a statement Monday from the New York-based company that didn't disclose terms. The agreement marks FWD's entry into Japan since its 2013 founding.

AIG Chief Executive Officer Peter Hancock has been selling assets to simplify his insurer and free up funds for share repurchases. He reached a deal in August to sell a mortgage guarantor to Arch Capital Group for US$3.4 billion and has also announced agreements to exit a broker-dealer unit and a Lloyd's of London operation.

"Like other actions we've taken this year, the sale of AIG Fuji Life makes us a leaner insurer that's better focused on the geographies and segments where we have the critical mass and expertise to provide tremendous value to our clients," Mr Hancock said in the statement.

Mr Li, the son of Asia's richest man, Li Ka-shing, has worked with AIG in the past. In 2010, his firm acquired an asset manager, PineBridge Investments, from the insurer, which was selling assets to repay a government bailout. He expanded into insurance two years later by adding units in Hong Kong, Macau and Thailand from ING Groep NV, which had also suffered from the recession.

This year, FWD expanded in Vietnam through agreeing to buy a business from Great Eastern Holdings.

Activist Carl Icahn won representation to the AIG's board this year after pressuring the firm to improve returns. He said in August that he would have liked to see a sale of some of the Japan business. AIG last year noted prolonged delays in integrating its units in the region, AIU and Fuji Fire & Marine - a snag that kept the insurer from participating in a wave of unprecedented deal making in the industry.

AIG finished acquiring Fuji Fire & Marine in 2011. The insurer will keep operating through its local subsidiaries of that business, AIU and American Home Assurance, according to the release. Japan is the largest personal insurance market globally for AIG based on net premiums written.

BLOOMBERG