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AIG set to buy American General

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New York--American International Group Inc., the world's largest insurer by market value, has agreed to buy rival American General Corp. for about $23 billion in stock, strengthening its U.S. life insurance and annuities business. The acquisition, the largest ever in the global insurance industry, will create a strong force in the expanding U.S. annuities market and give the expanded AIG a market value of $215 billion, making it the world's second-largest financial company behind banking-insurance giant Citigroup Inc., which is worth about $250 billion. American General's decision scuttles Prudential Insurance Co. of America's planned takeover, which was agreed on March 12. As part of the deal, American General paid Prudential a $600 million breakup fee.
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