AIG agrees biggest asset sell-off since its bailout by U.S. government


Updated:

American International Group has agreed to sell it's Taiwan life insurance unit for $2.1billion, a key step in its effort to raise cash after a U.S. government bailout last year saved the company from collapse.

Primus Financial, a new firm founded by Citigroup's former investment banking head in Asia and a Chinese partner, has agreed to purchase Nan Shan Life, AIG said, ending a roughly five-month auction that saw several corporate and private equity bidders pursue the division.

With the Nan Shan agreement sealed, AIG is now focused on raising cash from two other major assets in Asia.

AIG)

The deal ends a five-month auction that saw several corporate and private equity bidders pursue the division


Hong Kong-based life insurer AIA is seeking a more-than $2billion initial public offering while American Life Insurance, which generates half its revenue in Japan, is seeking a reported $5billion in an IPO.

Both companies have also attracted acquisition interest, though nothing yet has materialised.

The sale of Nan Shan, in an auction run by Morgan Stanley, allows AIG to check one business off its list of units to sell, after the United States injected $80billion in taxpayer money into the company after it nearly collapsed late last year.

Primus, run by former Citi executive Robert Morse, and Hong Kong investment group China Strategic Holdings will pay $2.15billion for AIG's 97.5 per cent stake in Nan Shan, AIG said.

Some analysts and bankers involved in the deal said putting a valuation on the AIG's Taiwan life insurance unit was difficult.

'The pricing is tricky. If you just look at the book value of Nan Shan, then the acquisition price is at a 30 percent discount,' said Pandora Lee, analyst with UBS.

'But for an insurance company, book value is not the only consideration, there are other factors like the people, the products etc,' Lee said. 'So its difficult to say at this point if they've got a good deal or not.'

Primus and China Strategic will seek loans from Taiwanese banks to finance the deal.

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