AIG has sold a stake in its Asian life insurance subsidiary AIA, raising $US6 billion ($5.6 billion) to repay more of its debt to the US Government.

AIG will cease to be a controlling shareholder in Hong Kong-listed AIA after selling a 14.3% stake to institutional investors, but will still hold 18.6% of the company.

The Hong Kong company owns AIA Australia, which says it provides life cover to 10% of Australians.

AIG listed AIA in 2010 at $HK19.68 ($2.39) a share and last week sold the shares for $HK27.15 ($3.30). It has agreed not to sell any more shares before September.

The US Government had to bail out AIG in 2008 during the global financial crisis, and it still owns about 77% of the company.