AIG agreed Monday to sell its American Life Insurance Co. unit to MetLife Inc. for $15.5 billion in cash and stock, in beleaguered AIG's second sale of an international unit in a week.

AIG said it will sell the unit, known as Alico, for $6.8 billion in cash and the remainder in MetLife equity. The deal leaves AIG as the second-largest shareholder of MetLife, with a stake of more than 20% in the company.

Selling Alico, one of its largest international life insurance businesses, will allow government-controlled AIG to take yet another step in repaying the nearly $132 billion it borrowed from the federal government beginning in 2008 to avoid collapse.

Expected to close by the end of the year, the companies said the acquisition will also help MetLife, the largest seller of life insurance in the United States, grow internationally and especially target Japan. The deal came a week after AIG announced an agreement.

Here in the former capital of the Old Confederacy, where resistance to the supremacy of federal law has a long and tortuous history, a new battle is being waged over a question that could undercut a key part of President Obama’s health care proposal: whether Washington can require that most Americans have health insurance.

The Virginia Legislature this week is poised to become the first state to pass legislation that says citizens cannot be required to have medical insurance. Dozens of other states are considering similar measures, possibly setting the stage for one of the greatest tests of federal power over the states since the civil rights era.

If states are allowed to opt out of the mandate, the foundation of Obama’s effort would be undermined, turning the nascent revolt here into one with national implications. The debate goes far beyond a disagreement with the approach to health care coverage taken in Massachusetts.

Three years ago, Sen. John McCain (R-Ariz.) was pretty clear about his stand on the military's "don't ask, don't tell" policy. A former war hero, McCain said he would support ending the ban once the military's top brass told him that they agreed with the change.

"The day that the leadership of the military comes to me and says, 'Senator, we ought to change the policy,' then I think we ought to consider seriously changing it," McCain said in October 2006 to an audience of Iowa State University students.

That day arrived Tuesday, with Defense Secretary Robert M. Gates and Joint Chiefs Chairman Mike Mullen testifying to senators after President Obama's announcement that he would seek a congressional repeal of the 15-year-old policy. Mullen called repealing the policy, which bans openly gay men and lesbians from serving, "the right thing to do."

Republicans have moved ahead of Democrats by 48% to 44% among registered voters in the latest update on Gallup's generic congressional ballot for the 2010 House elections, after trailing by six points in July and two points last month.

The Nov. 5-8 update comes just after Republican victories in the New Jersey and Virginia gubernatorial elections, which saw Republicans replace Democrats as governors of those states.

As was the case in last Tuesday's gubernatorial elections, independents are helping the Republicans' cause. In the latest poll, independent registered voters favor the Republican candidate by 52% to 30%. Both parties maintain similar loyalty from their bases, with 91% of Democratic registered voters preferring the Democratic candidate and 93% of Republican voters preferring the Republican.

An Illinois primary election that was supposed to set the stage for a high-stakes political showdown in President Barack Obama's home state instead produced intense confusion: virtual ties in the Democratic and Republican races for governor.

Gov. Pat Quinn held a tiny lead Wednesday over Comptroller Dan Hynes in the Democratic primary. The margin of less than 1 percent was enough for Quinn to claim victory, but Hynes insisted the fight was not over.

Three Republicans were in a near deadlock. State Sens. Bill Brady and Kirk Dillard, along with businessman Andy McKenna, were within about a percentage point of one another. Tuesday's first-in-the-nation primary did decide the field in the race for the U.S. Senate seat held by Obama until his presidential victory.