NEW YORK -- "American International Group Inc. reportedly is in discussions to sell one of its largest life insurance units to MetLife Inc., a move that would represent its biggest divestiture since its 2008 bailout.

The sale would send one of the beleaguered insurer's most prized assets to its New York-based rival and allow it to repay billions of dollars to the federal government.

Separately, two influential lawmakers last week asked the Government Accountability Office"the auditing arm of Congress"to launch a broad investigation into the handling of the package that saved AIG from bankruptcy in 2008. This week, the House Committee on Oversight and Government Reform is to hold a hearing at which Treasury Secretary Timothy Geithner and former Treasury Secretary Henry Paulson will testify about their roles in New York-based AIG's bailout.

Last week, the Wall Street Journal reported that MetLife would pay between $14 billion and $15 billion for American Life Insurance Co., an international life insurance unit of AIG based in Wilmington, Del. The deal could close in several weeks, unless negotiations fall apart over remaining terms, the report said in citing people familiar with the discussions. AIG declined to comment.

At year-end 2008, ALICO said it had $89 billion in assets under management.

If successful, the sale would represent the largest sale to date in AIG's effort to sell noncore assets to repay the federal rescue package. The bailout provided up to $182 billion to AIG; as Dec. 31, 2009, AIG still owed $97 billion. Roughly $9 billion from the ALICO sale would go toward repaying the government loan, the report said.

ALICO, which operates in more than 50 countries, is “positioned very strongly in Japan” and “has top five positioning in many of the other markets” it serves, Clark Troy, a senior analyst at Boston-based independent research and advisory firm Aite Group L.L.C., said in research note last week.

In December, AIG positioned the unit for sale or an initial public offering by transferring ALICO and another AIG life insurance unit, American International Assurance Co., to a special-purpose vehicle through two debt-for-equity swap transactions with the Federal Reserve Bank of New York.

Attempts to sell the unit were stalled for more than a year as AIG turned down what it viewed as low bids during the financial crisis. If successful, the ALICO sale “would vindicate (AIG President and CEO Robert) Benmosche's strategy of patient divestiture of strategic AIG assets,” Mr. Troy wrote.

Mr. Benmosche, a former CEO of MetLife, reportedly is excluded from the negotiations with MetLife to avoid potential conflicts of interest.

Since its rescue, AIG has struck deals to sell more than $12 billion of assets through roughly 24 transactions.

Meanwhile, last week brought fresh calls to investigate the federal government's rescue of AIG. Rep. Edolphus Towns, D-N.Y., the chairman of the House Oversight Committee, and Rep. Elijah Cummings, D-Md., asked the GAO to conduct a wide-ranging investigation of the AIG bailout.

“We request the GAO undertake a full review of all aspects of federal assistance "whether through the Federal Reserve, the U.S. Department of the Treasury or any other public entity "provided to AIG from 2007 to the present,” the two Democrats said in a letter to Gene L. Dodaro, the acting U.S. comptroller general.

They also said the GAO should examine who decided that AIG should be saved from filing for bankruptcy. In addition, the GAO should evaluate payments by AIG to counterparties of credit default swaps and examine who decided to pay them 100 cents on the dollar, the congressmen wrote.

AIG declined to comment on the letter requesting the GAO review.

While a GAO audit could take several months, lawmakers have a chance Wednesday to quiz two key players in the AIG bailout saga when the House Oversight Committee holds a hearing at which Messrs. Geithner and Paulson are to testify.

Mr. Geithner has been under fire since early January reports that the FRBNY instructed AIG to withhold information in a December 2008 regulatory filing about more than $62 billion it paid to counterparties.

The hearing also will include testimony from Elias Habayeb, former chief financial officer of AIG Financial Services Group.

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