Bailed-out insurer American International Group Inc has announced the sale of shares of Hong Kong-based AIA Group Ltd <1299.HK> by means of a placing to certain institutional investors.

AIG did not specify the amount it has placed. The U.S. insurer said it expects to use the net proceeds from the placing to reduce the balance due to the U.S. Treasury Department's preferred equity interest in the special-purpose vehicle in which AIG holds the AIA ordinary shares.

The pricing of the placing will occur no later than March 6, the company said.

Last week, Reuters reported that AIG had sold the entire $500 million stake it held in private equity firm Blackstone Group LP .

AIG, majority owned by the U.S. government after being bailed out during the financial crisis of 2008, had acquired the stake before Blackstone went public in 2007, a source said.

The stake sale was part of AIG's effort to monetize non-core assets, reduce risk and deleverage.

(Reporting by Nadia Damouni; Editing by Dale Hudson)