AIG, which was kept alive by a $182.5 billion rescue by the US government in September 2008, will get $25 billion in cash — $20 billion of that from a Prudential rights issue — and $10.5 billion in new shares and securities for the sale of AIA Group Ltd.

The combined group will be the leading life insurer in Hong Kong, Singapore, Malaysia, Indonesia, Vietnam, Thailand and the Philippines, as well as the biggest foreign life insurer in China and India, Prudential said.

AIG said it would use cash from the sale to redeem $16 billion worth of preferred interests held by the Federal Reserve Bank of New York and to repay about $9 billion to a Fed credit facility. Prudential securities would be sold over time to make additional payments on debt, AIG said.

In selling to Prudential, AIG scrapped an earlier plan for an initial public offering of AIA.

“We decided that a sale to Prudential enables AIG to realize value on a faster track to repay US taxpayers,” said AIG President and CEO Bob Benmosche.

“This transaction, the most significant milestone to date in our ongoing effort to repay taxpayers, 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.” AIG shares were up 12 percent at $28.26 in pre-opening trading on the New York Stock Exchange. Shares in Prudential PLC — which is not connected to Prudential Financial Inc., based in Newark, NJ. — fell 11.5 percent to 533.5 pence by midday on the London Stock Exchange following the announcement. “Whilst in the longer term we can see the advantages of this audacious and opportunistic acquisition, on a 12 month view, we think that the shares will underperform,” said Barrie Cornes, analyst at Panmure Gordon.

AIG, which is now 80 percent owned by the US government, said Friday it lost $8.87 billion in the fourth quarter as its general insurance business remained weak.

As of Dec. 31, AIG’s outstanding assistance from the US government totaled $129.26 billion, up 5.7 percent from the end of the third quarter due to accrued interest.

That total includes $94.76 billion in loans and interest, and $34.5 billion tied to the value of investments the government bought from AIG.