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HONG KONG, Dec 17 AFP

December 17 2012, 5:31PM

US insurance giant American International Group (AIG) will sell its remaining stake in Asian insurer AIA, in a deal that could raise up to $US6.5 billion ($A6.19 billion).

The sale will mark AIG's total exit from AIA after the US insurer, which was bailed out by Washington during the financial crisis, sold two-thirds of the unit in a Hong Kong listing in 2010 to help repay the financial aid.

The Hong Kong initial public offering in 2010 raised $US20.5 billion, making it one of the world's biggest.

AIG, which holds 13.69 per cent in AIA, started selling 1.65 billion shares at a price range of $HK$29.65 to $HK30.65, Dow Jones Newswires said, quoting a term sheet.

In a short statement AIA said trading in it had been suspended in Hong Kong on Monday pending the potential sale by AIG on a "significant portion" of its stake.

AIA said it expects the trading to resume no later than Tuesday.

AIG has sold off assets as it restructured itself back to a path of profitability, and raising money to repay the $US182 billion bailout it received from the US government four years ago.

It has sold AIA shares twice this year, raising a total of $US8 billion.

The move also comes a week after the US Treasury sold off all of its remaining shares in AIG, earning the government $US7.6 billion from the sale and taking the government's net profit on the AIG bailout to $US22.7 billion.