NEW YORK (Bloomberg) — American International Group Inc., the insurer rescued by the US, agreed to sell its Canadian mortgage guarantor to a group led by the Ontario Teachers' Pension Plan as the firm scales back bets tied to home loans.

The AIG unit is the second largest private provider of mortgage insurance in Canada and has assets of C$274 million ($264 million) and equity of C$127 million as of Sept. 30, the pension plan said today in a statement. Terms weren't disclosed.

The deal follows the agreement last month to sell AIG's Israeli mortgage insurer as Chief Executive Officer Robert Benmosche dismantles the money-losing business. New York-based AIG, which backs home loans in its home country through its United Guaranty unit, posted a $1.43 billion operating loss from mortgage insurance in the first nine months of 2009 as US foreclosure filings climbed to a record.

"Teachers' is prepared to support the growth of the business," Erol Uzumeri, a senior vice president of Teachers' Private Capital, said in the statement.

US mortgage guarantors are divesting units outside their home market to boost capital. AIG sold its Israeli unit to Harel Insurance Investments & Financial Services Ltd. for $35.5 million, the buyer said in a December 23 statement. PMI Group Inc. sold an Australian business to QBE Insurance Group Ltd. for $920 million in 2008. Genworth Financial Inc. sold shares in the largest Canadian mortgage insurer last year.

Mortgage insurers pay lenders when homeowners default and foreclosures fail to cover costs. The AIG sale is expected to be completed in the first quarter, said Deborah Allan, a spokeswoman for Teachers'. Lauren Day, a spokeswoman for AIG, declined to comment.

AIG, which needed a $182.3 billion US bailout after losses tied to housing markets, has secured agreements to raise more than $12 billion in asset sales since its 2008 rescue. More than three-quarters of the assets AIG agreed to sell since its bailout have non-US acquirers, according to data compiled by Bloomberg.

Ontario Teachers', Canada's third-biggest retirement fund, has been taking stakes outside the country, including an investment in Bristol International Airport in the UK. The pension fund, with about C$87.4 billion of assets at the end of 2008, is working with Canada Pension Plan Investment Board on a joint cash-and-stock offer of A$6.8 billion ($6.2 billion) to buy Transurban Group, the Australian toll-road operator.

ŸAIG named Jeff Hurd to lead the company's human resources department as Chief Executive Officer Robert Benmosche fills management vacancies.

Hurd was formerly the New York-based insurer's chief administrative officer, Benmosche said yesterday in a memo to staff, and replaced Andrew Kaslow, the human resources chief who departed last year. AIG hired Michael Cowan, a former senior vice president of global corporate services at Merrill Lynch, to take Hurd's old post, the company said.

Benmosche, who took over at AIG in August, is seeking to replace executives who have departed after the company's $182.3 billion government bailout.

He said he is looking for a new general counsel and chief compliance officer after Anastasia Kelly and Suzanne Folsom resigned last week.