NEW YORK (AP) - American International Group Inc. is selling a cornerstone of its business, Asia-based life insurer AIA Group, in a government-approved $35.5 billion deal. The sale to British insurer Prudential PLC could reduce by nearly one-fifth the amount of federal bailout money still invested in struggling AIG.

But officials and analysts say it's not clear whether taxpayers will eventually recoup all the money AIG drew from a $182.5 billion rescue package the government committed to at the height of the 2008 credit crisis. In return for that package, the government got a nearly 80 percent stake in the insurer.

The sale is another step in AIG's ongoing attempt to restructure its business, become profitable and repay the government. Exactly how it plans to do that remains unclear. The AIA deal will give AIG $25 billion in cash and $10.5 billion in securities. The cash portion would allow AIG to pay back nearly 20 percent of the almost $130 billion in bailout funds that are outstanding. Together with an anticipated sale of American Life Insurance Co., or Alico, to MetLife Inc., the sale could net enough to eventually cover the Federal Reserve Bank of New York's $47.9 billion investment in AIG.

AIG debt to the government also includes $47.3 billion owed the U.S. Treasury and has $34.5 billion in outstanding assistance tied to the value of investments the New York Fed bought to prop up AIG.

A US Treasury official who spoke on condition of anonymity said it's not yet clear whether all the taxpayer money will be returned.