AIG is selling an overseas insurance business to rival MetLife for $15.5 billion, as it continues to raise funds to pay off a federal bail-out.

MetLife is paying $6.8 billion in cash and $8.7 billion in shares for American Life Insurance Company which operates in more than 50 countries.

The announcement comes a week after AIG agreed to sell its Asian business AIA to UK group Prudential for $35.5 billion.

AIG is seeking to repay $182.3 billion of loans from the US government.

The insurer was given an initial $85 billion in September 2008 to prevent its collapse at the height of the turmoil in the global credit markets, subsequently rising to $182.3 billion.

AIG is also looking to repay a $9 billion investment in the company made by the Federal Reserve Bank of New York.

MetLife is currently the largest life insurer in the US. Both AIG and MetLife are based in New York.

The purchase of Alico will boost MetLife's presence in Japan, the Middle East, Latin America, and central and eastern Europe.

In a statement, MetLife chief executive Robert Henrikson said: "With this acquisition, MetLife is delivering on its strategy to accelerate international expansion as a powerful growth engine for the company."

AIG said the sales of both Alico and AIA would give it "greater flexibility" to move forward with its "restructuring and rebuilding efforts".

The $35.5 billion Prudential is paying for AIA comprises $25 billion in cash and $10.5 billion in shares.