AIG Closer in Bid for American General

American International Group Inc., the world’s largest publicly traded insurer, moved a step closer to winning a $23-billion bid to acquire American General Corp. AIG signed a “confidentiality agreement” to negotiate the terms of the offer with Houston-based American General. The bid tops a $20-billion offer from Prudential, Britain’s second-largest insurer. Prudential said it would sue AIG in Texas in an effort to derail the bid. The British company said in a legal filing that AIG violated U.S. law by making its all-stock bid without filing a registration statement. AIG also made “false and misleading” statements in its offer, Prudential said. Buying American General would give AIG an additional 12 million customers and about $120 billion of assets as it builds its life insurance and retirement savings business in the U.S. and its consumer finance business internationally. AIG estimates it can wring out $200 million in savings in the first full year after the acquisition closes and that the purchase would boost earnings 8% to 10%. AIG shares rose 90 cents to close at $77.08, while American General gained 63 cents to close at $42.75, both on the New York Stock Exchange.