HONG KONG: American International Group Inc (AIG), the insurer selling assets to repay a US government bailout, has designated Deutsche Bank AG and Morgan Stanley to handle the initial public offering of an Asian life insurance unit, according to unidentified sources.

AIG plans to launch an IPO in the first quarter of 2010 for the American International Assurance Co unit (AIA) and list it on an Asian exchange. The company will select more banks as book runners later, people familiar with the deal said yesterday.

Banks are vying for fees to be made from the dismantling of AIG, which got a $182.5 billion federal rescue after the company almost collapsed last year from losses tied to subprime mortgages. Chief executive Edward Liddy has announced more than $6.5 billion of asset sales since the New York-based insurer's first bailout last September.

The insurer, once the world's largest, shelved talks with potential corporate buyers of AIA in March because bids were too low, people familiar with the matter said at the time.

Michael West, a Hong Kong-based spokesman for Deutsche Bank, and Nick Footitt, a Morgan Stanley spokesman in the city, both declined to comment yesterday.

The sale of AIA may raise as much as $8 billion, industry sources said last month. That figure assumes selling about 30 percent of the division, they said.

AIA and American Life Insurance Co (Alico) are AIG's biggest non-US life insurance units. AIA operates in China, India, Korea, Australia, Singapore, Malaysia, Thailand, Vietnam and Indonesia. AIG is also seeking to sell or take public Alico, which operates in Taiwan, Japan, Nepal, Pakistan and Bangladesh.

AIA has more than 20 million customers and more than $60 billion of assets.

AIG was first rescued in September with an $85 billion credit line after a liquidity squeeze caused by credit-default swaps the insurer sold to banks. The bailout expanded to $182.5 billion as the government sought to prevent losses at banks that did business with AIG.

AIA has operated in Asia for 90 years. It has 20,000 employees and 250,000 agents in markets from China to Australia, it said in a May statement. The company sells life, accident and health insurance policies and private retirement planning and wealth management services, according to its Web site.

China Daily - Bloomberg

(HK Edition 06/19/2009 page3)