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TAIPEI — American International Group Inc. said Wednesday it had agreed to sell its 97.6 percent stake in Nan Shan Life Insurance Co., Taiwan's third-biggest insurer, to a local business group for $2.2 billion.
The deal with the Ruen Chen consortium puts AIG another step closer to freeing itself from U.S. government ownership. The New York insurance giant received a bailout of $182 billion during the financial crisis, the largest of any company, after making huge bets on complex debt securities that went bad.
AIG has not found it easy to sell the Taiwan unit. Just five months ago, regulators denied AIG's first attempt to sell the business. The Nan Shan sale will have to pass muster with Taiwan's Financial Supervisory Commission, an independent government body that is far from certain to give approval.
In August 2010, the FSC turned down AIG's effort to sell Nan Shan to Hong Kong-based Primus Financial Holdings because of fears that Primus might be a front for mainland Chinese interests. Taiwanese law prohibits Chinese investment in the island's financial sector.
"Ruen Chen has demonstrated that it is able and willing to invest in Nan Shan's future, and that it will protect and serve the best interests of Nan Shan's policyholders, employees and agents," AIG's chief executive Robert Benmosche said in a statement.
The sale is part of a series of actions after AIG announced a plan in September to start exiting government ownership. The U.S. government will own 92.1 percent of AIG shares later this week after a conversion of preferred shares takes place. The government plans to start selling its stake later this year.
Last week, AIG offered all its current shareholders warrants to buy shares. Earlier this month and in December it obtained $3 billion in credit facilities, raised $2 billion by selling senior unsecured notes and also established a $500 million contingent liquidity facility.
AIG shares have more than doubled in the past year. Much of the gain came after Sept. 30 when the company announced its plan to exit government ownership.
AIG became a symbol for excessive risk on Wall Street during the crisis that peaked in late 2008. The company sold insurance-like protection against losses on mortgage bonds and other risky investments. When the value of those investments dropped, AIG could not afford to cover the losses.
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AP Business Writer Pallavi Gogoi contributed to this story from New York.
