American International Group (NYSE: AIG), once the world's largest insurer, is selling assets outside the U.S. to repay a government bailout. The Carlyle Group, KKR, JC Flowers, and other U.S. private equity firms and Asian financial groups are reported to be interested in AIG's Taiwanese unit Nan Shan Life Insurance Co.
"Everyone hopes this is going to be a fire sale as AIG is in a difficult situation," said a local partner of Standard & Poor's.
New York-based AIG and adviser Morgan Stanley (NYSE: MS) are distributing key financial data to potential buyers. A first round of bids is scheduled for July 3, and Nan Shan Life is expected to fetch about $2 billion.
Nan Shan Life reported having 4 million policyholders and $45.5 billion in assets as of the end of April, but is also reported to be burdened with unprofitable legacy policies. Putting a value on a life insurer can be difficult, given the way such companies are structured. "Unless you have a very detailed view of the assets and liabilities, it's educated guessing," said a source close the deal. The size of final bids may depend on how much buyers estimate Nan Shan Life will need to cover those legacy policies.
AIG will be the latest insurer to exit Taiwan. Dutch financial group ING Group (NYSE: ING) sold its Taiwan business last October to Fubon for $600 million, and more recently Britain's Prudential (NYSE: PUK) also disposed of its Taiwan operation to Taipei-based China Life.
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