AIG’s $2.2bn Taiwan unit sale extended

City A.M. Reporter
Bailed out insurer American International Group (AIG) and China Strategic Holdings have agreed to extend the deadline for completing AIG’s planned $2.2bn (£1.5bn) sale of its Taiwan unit.

While the extension could help AIG and its buyers address concerns from Taiwanese regulators, the longer the transaction is stretched out the less likely it will succeed.

The delay in selling Nan Shan Life adds to the frustration of AIG , which had to abandon the $35.5bn sale of its Asian life insurance business to Prudential earlier this month following opposition from Pru shareholders.

China Strategic said yesterday that the deadline for the Taiwan unit sale had been extended by three months to 12 October.

China Strategic and Hong Kong investment firm Primus Financial agreed to buy the unit, Nan Shan Life Insurance, in October 2009. But they have been unable to seal the deal because of concern in Taiwan over their political connections with mainland China and their lack of expertise in the insurance business.

“They keep on asking questions and we have been submitting supplementary information. Some of their questions will need time to solve such as information of our future investors,” China Strategic chief executive Raymond Or said. “We will try our best to address their requests but some issues are out of our control.”

Despite booming business ties, many in Taiwan are suspicious of China’s intentions towards the island, while concerns have also been raised over what might happen to Nan Shan’s more than 4m policyholders, nearly one-fifth of Taiwan’s population. The buyers and AIG moved to ease some of those concerns by offering to put $325m of the purchase price in escrow for four years to beef up the insurer’s capital.