AIG Hits a Snag in Sale of Taiwan Unit

New York, NY (TheStreet) -- AIG may have hit a snag in its effort to divest itself of a Taiwan unit.

Last month, AIG(AIG) announced that it would sell Nan Shan Life Insurance to a Hong Kong consortium consisting of Hong Kong-based Primus Financial Holding and China Strategic Holdings. AIG has assured the unit's employees and policy holders of the consortium's long-term commitment to Nan Shan.

Plans were in the making, until the consortium surprised Taiwan officials, announcing their intention to sell 30 percent of Nan Shan to Taipei-based Chinatrust Financial Holding before regulators had a chance to vet the deal. China Strategic would get a 9.95% stake in Chinatrust Financial as part of the plan.

China Strategic seemed to have been in a hurry to sell the unit, and that has apparently alarmed Taiwan regulatory officials. They will now investigate the company for violations of long-term investment commitments to Nan Shan, according to a Hong Kong newspaper. Taiwan's Investment Commission has returned China Strategic's application to buy Nan Shan and has asked for more documentation, the newspaper reported.

Taiwan's economics ministry has denied reports that it rejected the sale of the AIG unit to the consortium.

AIG will use proceeds from the sale to pay down loans, which include a $182.3 billion government rescue package. Recently the company reported a third quarter adjusted profit of $1.9 billion compared with an adjusted profit of $9.2 billion the same time last year.

Share of AIG are trading down 0.17% at 35.60.

-- Reported by Andrea Tse in New York

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