By Hugh Son, Zachary Mider and Jacqueline Simmons
Bloomberg

AMERICAN International Group Inc. got bids from MetLife Inc. and Axa SA for a life-insurance unit spanning more than 50 countries, a sale that may mark the biggest step yet in the firm?s dismantling, said three people familiar with the situation.

MetLife made a preliminary offer of $11.2 billion for American Life Insurance Co., a price that might drop to about $8 billion because of deterioration in the unit?s financial condition, said the people, who declined to be identified because negotiations are private.

A rival bid from Axa excluded operations in Japan, Alico?s biggest market, the people said.

Forced to auction off dozens of business units to repay part of a $150-billion government bailout, AIG might shelve the Alico sale or issue shares to the public if it failed to find a buyer at the right price, one of the people said.

AIG is selling insurance subsidiaries amid a global stock-market rout that pushed the Standard & Poor?s 500 Life & Health Insurance Index down 73 percent in the past year through Monday.

?AIG?s future is in the hands of the government now,? said Mitsushige Akino, who oversees about $430 million as chief investment officer at Tokyo-based Ichiyoshi Investment Management Co.

?It?s too big to fail, so the best scenario is to separate the businesses that are still functioning, like Alico, and leave the main AIG to take all the bad parts and receive the US government help.?

Peter Stack, a spokesman for New York-based MetLife, declined to comment, as did Christina Pretto of New York-based AIG and Emmanuel Touzeau of Paris-based Axa.

For MetLife, already the largest US life insurer, adding Alico would bring customers on five continents, from the UK to Japan.

Robert Henrikson, MetLife?s chief executive, said in December his firm was in an ?amazing position? to pursue takeovers because it weathered the financial crisis better than rivals.

Life insurers are facing losses and credit-rating cuts because of the declining value of investments.

At $8 billion, the purchase would be the biggest since Henrikson took charge in 2006 and the second-largest since MetLife sold shares to the public in 2000. The only bigger deal was MetLife?s purchase of Citigroup Inc.?s life and annuity business in 2005 for about $12 billion.

AIG, led by chief executive Edward Liddy, is seeking to sell as much as two-thirds of itself after a government bailout last September. In addition to Alico, the company is selling separate life units in the Philippines and the US, and a 49-percent stake in an insurer that operates in Asian nations including China.

AIG has secured agreements to raise more than $2.3 billion in sales of units and other assets.