2 Mar 2010

AIG sells Asian insurance arm

2:39 pm on 2 March 2010

Britain's second largest insurer, Prudential, is buying American insurer AIG's Asian business AIA for $US35.5 billion.

Shares in Prudential tumbled 12% on the London share market following the news, despite the fact the deal will make Prudential the biggest foreign insurer in Asia, the BBC reports.

Investors are concerned because the deal will be funded by huge borrowing and a $20 billion rights issue.

AIG is is selling the highly profitable AIA to repay some of the $US130 million bailout from the US government.