AmGen Deal Would Boost AIG's Life Market Standing.

American International Group Inc. dealt a blow to Prudential plc's U.S. ambitions with an all-stock bid of $23 billion for American General Corp., a purchase that would launch AIG to a new level in the domestic life insurance market.

AIG is offering $46 a share for American General, which would top the current value of Prudential's proposal. That bid dropped in value from its first day when angry Prudential shareholders sent the London based insurer's stock plunging, and the effective price by some estimates had fallen to about $20 billion from the initial $26.5 billion figure Prudential put on its offer.

Prudential still regards its agreement with American General as binding, a spokesman said. It issued a brief statement noting that its merger agreement with American General "remains in full force and effect."

The AIG offer is subject to a 5% "collar" on AIG's stock price during an agreed-upon period before closing, and it would amount to a minimum of 3.5462 and a maximum of 0.6037 MG shares for each American General share.

Maurice R. Greenberg, AIG's chairman and chief executive officer, painted the transaction as creating a potent combination of both top-line growth and substantial savings--at least $200 million after tax over 12 to 18 months. But even before expense savings, the acquisition would add to AIG's earnings, Greenberg said.