AIG said it has agreed to sell its Asian life insurance company, American International Assurance (AIA), to Prudential plc of the U.K. in a deal worth $35.5 billion–$25 billion in cash, $8.5 billion in Prudential equity and equity-linked securities, and $2 billion in preferred stock (Prudential plc is not related to the U.S. insurance and financial services company Prudential).

As AIG has attempted to turn itself around after its near implosion in 2008, it has looked to sell off profitable parts of its business to help it repay the $97 billion it still owes the U.S. government (and taxpayers), much of it to the New York Fed. AIG is expected to announce a similar deal, perhaps this week, to sell another non-U.S. business, American Life Insurance Co., ostensibly to MetLife.

AIG said it will use the proceeds of the AIA sale to redeem $16 billion in preferred “interests” held by the Federal Reserve Bank of New York (FRBNY), and to repay $9 billion to the New York Fed that it borrowed under the FRBNY Credit Facility. AIG said it also plans to sell the $10.5 billion in Prudential securities over time; proceeds will also be used to repay the FRBNY Credit facility debt.

In the statement announcing the deal, AIG CEO Bob Benmosche called it “the most significant milestone to date in our ongoing effort to repay taxpayers,” and said the deal also “gives us greater flexibility to move forward with AIG’s restructuring and focus on enhancing the value of our key insurance businesses, which will benefit all stakeholders.”