The insurance giant is selling its HSB subsidiary for $742 million to Munich Re in its third unit sale this month.

NEW YORK (CNNMoney.com) – As part of its plan to pay back a massive government bailout, American International Group Inc. is selling assets, with its most recent sale on Monday.

New York-based AIG (AIG, Fortune 500) said Munich Re, a German reinsurer, will buy AIG subsidiary HSB Group Inc., parent of The Hartford Steam Boiler Inspection, an equipment insurer.

The companies said that Munich Re will acquire all outstanding shares for $742 million in cash and assume $76 million of outstanding HSB capital securities. The deal is expected to close at the end of the first quarter of 2009, AIG said.

This is AIG’s third unit sale this month, and its stock rose 5% Monday. This is welcome news to a company that has seen its stock plunge 97% so far this year.

“The strategy is for AIG to sell off as many and as much assets as needed to pay off the government,” said Michael Paisan, AIG analyst at Stifel Nicolaus & Co. “They’re selling assets bit by bit. This is something that’s going to be an ongoing affair through 2009.”

On Sept. 16, the Federal Reserve agreed to lend $85 billion to AIG to keep the battered insurer from failing out of the fear that it would cause massive disruptions to the economy. AIG’s taxpayer bailout has since expanded to $152 billion.

AIG announced two other unit sales in early December, though the company refused to divulge how much money changed hands.

On Dec. 3, AIG and Omaha-based Tenaska Inc. said that Tenaska would re-purchase three units owned by AIG: Tenaska Marketing Ventures, Tenaska Gas Storage and Tenaska Marketing Canada. This deal is expected to close by Jan. 2, 2009.

On Dec. 1, AIG said it would sell its subsidiary AIG Private Bank to Aabar Investments, an institutional investor based in the United Arab Emirates.

Also, on Nov. 26, AIG and the Brazilian bank Unibanco said they would each purchase their “cross-holdings.” The companies said that AIG would buy shares in its subsidiaries that were held by Unibanco, and Unibanco would buy shares in its subsidiaries that were held by AIG.

Paisan said these deals are “relatively minor” compared to the debt that AIG has to pay off and compared to its remaining assets. He said the insurer’s international life insurance business is worth about $15 billion, its asset management business is worth several billion dollars, and its consumer finance business is worth about $2 billion.