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AIG Sells Car Insurance Unit to Zurich

AIG appears to be making headway in its plan to sell off non-core assets, with reports of two big deals emerging this week.

Updated from 9:39 a.m. EDT

American International Group


appears to be making headway in its plan to sell off

non-core assets

, closing one major deal on Thursday while announcing another.

AIG on Thursday afternoon confirmed widespread reports that the firm plans to sell its 21st Century car insurance operation to rival Zurich Financial Services Group for $1.9 billion. Zurich will pay $1.5 billion in cash and $400 million in face amount of subordinated, euro-denominated capital notes.

The deal includes the former AIG Direct business and Agency Auto business, but excludes AIG's Private Client Group, which services high net worth individuals.

Separately on Thursday, AIG said it has closed a deal to sell AIG Private Bank to Aabar Investments PJSC, an Abu Dhabi-based investment firm.

Aabar will pay $253 million for the transaction, and assume about $55 million of loans that other AIG divisions have made to the private bank, which services wealthy clients. The deal was first announced on Dec. 1.

AIG announced plans to rid itself of assets outside its core property and casualty operations after the government first stepped in to help the insurance giant last fall. However, the firm made little progress on major deals as M&A activity essentially froze up due to tight credit markets, economic uncertainty and general risk aversion.

While AIG is still trying to sell off other units, like a prized aircraft leasing business called International Lease Finance, it has closed at least four transactions in the past few weeks and several others since the start of the year. It's unclear how far along AIG is in the process of selling assets or unwinding toxic debt derivatives in its financial-products division, which nearly caused it to collapse and forced the government's intervention.

As part of an aid package topping $170 billion, AIG owed taxpayers about $45 billion as of April 8, according to the



CEO Edward Liddy said the firm is "very pleased" to have reached the 21st Century deal, "especially in this market environment. In addition, we are moving forward with discussions for several other transactions, and we continue to evaluate how best to assure the continued strength and success of all of AIG's businesses."

AIG shares were up 6.6% at $1.71 in afternoon trading.

Joseph Woelfel contributed to this report.