Updated from 1:37 a.m. EST

Bids for

American International Group's

(AIG) - Get Report

Asian arm are due Friday and a number of prospective bidders, including

HSBC Holdings

(HBC)

and

AXA SA

have abandoned the process and no further bids may be forthcoming, the

Wall Street Journal

reports.

AIG initially intended to sell 49% of American International Assurance, which is Asia's largest life insurer with operations in 10 countries. It has since signaled it would sell the entire unit.

The

Journal

reports the apparent failure of the auction could explain why AIG has asked the U.S. government to restructure the terms of its bailout. A key aspect of the plan involves allowing AIG to repay some of its obligations to the government, or up to $100 billion -- with stakes in operating businesses, such as those in AIA.

People close to potential bidders say AIG has been slow to market the business, and bidders have griped about AIG's price expectations of $20 billion to $40 billion on the unit.

In addition to HSBC and AXA, others initially interested in AIA included

China Life Insurance

,

Bank of China

and

Prudential PLC

(PUK) - Get Report

.

However, none of the parties is now likely to put forth a bid, the

Journal

reports. A number of the potential bidders value AIA in the $15 billion range, well below the price AIG had been expecting.

AIG has been selling or auctioning off assets and business units to repay some of the bailout loan.

Bloomberg

, meanwhile, reports AIG believes its plan to sell assets to repay a loan of $85 billion from the

Federal Reserve

won't work.

AIG may hand over stakes in some operations directly to the U.S. to reduce its debt,

Bloomberg

reports, citing a person close to the matter.

The insurer said Monday it is discussing "alternative options" with regulators to keep the firm afloat as it navigates through the financial crisis.

The U.S. government holds nearly an 80% stake in AIG, after loaning it $150 billion in taxpayer dollars to prevent the firm from collapsing last fall.

This article was written by a staff member of TheStreet.com.