NEW YORK - AMERICAN International Group Inc is close to a deal to sell its Canadian life insurance business, a source close to the transaction said on Friday.

The two sides are still in negotiations and a deal has not been finalised, but an announcement could come next week, the source said.

Neither the identity of the potential buyer nor the size of the transaction was known.

The unit is a 'medium-sized player' in Canada, said Byren Innes, a senior vice president at NewLink Group Inc, a financial services consulting company.

AIG, once the world's biggest insurer by market value, averted bankruptcy in September with an $85 billion (S$126.3 billion) federal bailout. The rescue swelled to $152 billion (S$225.7 billion) when it became clear it needed yet more US taxpayer money to survive.

AIG has said it plans to sell everything except its US property and casualty business, foreign general insurance, and an ownership interest in some foreign life operations.

The insurer agreed to sell HSB Group to German reinsurer Munich Re for $742 million last month. -- REUTERS