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American International Group Inc. (AIG) said Tuesday that it will sell its life insurance unit in Taiwan to a consortium led by Hong Kong-based investment company Primus Financial Holdings Ltd. for US$2.15 billion, in the largest sale globally of an AIG business so far.

AIG, which is raising funds to repay the tens of billions of dollars in bailout money it has received from the U.S. government, Tuesday confirmed that that Primus, co-founded by former Citigroup banker Robert Morse, and Hong Kong investment firm China Strategic Holdings Ltd. (0235.HK) won the bid for AIG's 97.5%-owned Nan Shan Life Insurance Co.

Nan Shan is Taiwan's third-largest life insurer by gross premiums and second largest by assets after Cathay Financial Holding Co.'s Cathay Life Insurance Co.

"We are pleased to have found a buyer who shares our confidence in Nan Shan's bright future, and who has pledged to continue Nan Shan's commitment to its policyholders, agents, and employees, as well as to the people of Taiwan," said Robert Benmosche, AIG Chief Executive Officer.

In acquiring Nan Shan, the Primus Financial consortium has agreed to maintain the Nan Shan brand, the existing compensation and benefits package for employees and the existing agency organizational and commission structure for a minimum of two years following the closing of the transaction, AIG said. The current Nan Shan management team will remain in place.

"We aim to develop Nan Shan into a leading Taiwan-based, pan-Asian financial services company, and Nan Shan's management team, agents, and employees are an integral part of this vision," Morse said in a statement.

The $2.15 billion price tag is well above the $1.2 billion-$1.3 billion Primus was tipped to have offered initially but in line with a $2 billion valuation when the unit was put on the block earlier this year. The deal is the biggest ever in Taiwan's financial sector, surpassing Standard Chartered's US$1.2 billion acquisition of Hsinchu bank in 2006, and brings to almost US$3.5 billion the announced amount AIG has raised in Asia.

In May, AIG said it sold its office building in Tokyo for US$1.2 billion. It has also sold some of its Philippine finance assets, its Hong Kong consumer finance unit, its Thai retail bank and credit card business, its Taiwan credit card company and its Indian back-office businesses, for smaller, or undisclosed amounts. It also sold its global third-party institutional asset management unit to Hong Kong tycoon Richard Li for around US$500 million a couple of months ago.

Until Nan Shan, AIG's biggest disposals globally were the US$1.9 billion sale of its energy and infrastructure investment assets in August and its U.S. personal auto insurance business for the same amount.

Waiting in the wings, however, is a much-touted US$5-billion-plus initial public offering of its Asian life-insurance unit, American international Assurance Co, which is set to list in the first quarter of next year, most probably in Hong Kong.

AIG has been selling some of its non-core businesses as part of a major restructuring plan to slim down after it was forced to accept billions in government support last autumn. However, Benmosche has said he doesn't want to be rushed into fire-sale prices. AIG's government bailout, which began in September 2008, has grown to include government support of all types totaling $180 billion at the end of June, AIG has said.

AIG picked Primus instead of Chinatrust Financial Holding Co. (2891.TW), Taiwan's credit-card giant and the biggest bancassurance services provider, because of its "long-term commitment to Nan Shan" and the company met the criteria set by AIG, Lauren Day, an AIG spokeswoman, told Dow Jones Newswires.

Chinatrust's shares fell 2.1% to NT$21.45 each at 0315 GMT in Taipei trade, when the key stock index eased 0.1%.

Others bidding for the unit included Fubon Financial Holding Co. (2881.TW) and Cathay Financial Holding Co. (2882.TW).

Based on Nan Shan's Web site, the company, founded in 1963, had NT$1.54 trillion (US$47.66 billion) worth of assets and a net worth of NT$99.68 billion (US$3.1 billion) on June 30. Nan Shan has 34,000 sales agents in addition to 4,000 employees.

Blackstone Advisory Partners and Morgan Stanley acted as financial advisors and Debevoise & Plimpton LLP and Lee & Li, Attorneys-At-Law served as legal advisors to AIG on this transaction. Deutsche Bank AG acted as financial advisor to Primus Financial on this transaction, while Simpson Thacher & Bartlett LLP and LCS & Partners acted as international and domestic legal counsel respectively.

-By Perris Lee Choon Siong and Nisha Gopalan, Dow Jones Newswires; +8862-2502-2557; perris.lee@dowjones.com