Sale of AIG Taiwan Unit Grows Tense

"The regulators are uncomfortable with the Hong Kong buyers having control [of Nan Shan] in the long term," said one of the sources cited by SCMP.

Although Taiwan and China are becoming increasingly open to strengthening their business ties, Taiwan is still wary of Chinese interests on the island. The two split in civil war in 1949 and, in recent years, Beijing has been pushing more aggressively for a one-China policy that eventually would see China and Taiwan united under one government.

The majority of residents in Taiwan are against the idea of communist control and have closely been watching developments in Hong Kong since the former British colony was returned to China in 1997.

In April, Taiwan's Far EasTone Telecommunications announced that it would sell 12% of the company to China's state-owned China Mobile. China is still waiting for approval from Taipei.

Earlier this month, about 1,000 employees from Taiwan's largest life insurer stood in front of the building of parliament in Taipei City urging lawmakers to closely supervise the sale of the Nan Shan and protect their jobs and interests.

Founded in 1963, Nan Shan has assets of more than $46 billion and almost 8 million policies held by roughly 4 million policyholders.

AIG Shares have inched 0.34% lower to $35.16 in after-hours trading.

-- Reported by Andrea Tse in New York

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