U.S. insurer AIG has raised almost US$37 billion through a divestiture of one business, and an initial public offering of another, that will enable it to continue moving ahead with its planned restructuring.

The completion of an IPO for AIA Group Ltd. raised about US$20.5 billion, and the sale of American Life Insurance Company to MetLife, Inc. raised another US$16.2 billion, the firm reported today. The proceeds will be used to repay the loan extended to AIG by the Federal Reserve Bank of New York, and to repay “a substantial amount” of the its preferred interests in certain AIG subsidiaries.

Proceeds from the transactions are being placed in an escrow fund with the NY Fed until the closing of the recapitalization plan, expected no later than the first quarter of 2011. The US Treasury reports that, as part of the restructuring, AIG will draw up to US$22 billion in remaining Troubled Asset Relief Program funds from the Treasury to purchase the NY Fed’s preferred interests in the special purpose vehicles holding AIA and ALICO, and Treasury will receive those interests.

After the restructuring, Treasury will own 92.1% of AIG, which is valued at approximately US$69.5 billion.

“As we said on September 30, AIG will restructure itself around its core property casualty and life and retirement services businesses, which are performing well, and will provide our company with a strong foundation to build value,” said Robert Benmosche, AIG’s president and CEO.

IE