China Life, Munich Re Interested in AIG Asia Assets

China Life Insurance, the world's biggest life insurer by market value, is interested in buying Asian assets of American International Group, a senior China Life executive briefed on the situation said on Monday.

"We want to buy parts of AIG's business, especially those in areas of Asia such as Hong Kong, Singapore and South Korea," the manager told Reuters.

Munich Re, the world's biggest reinsurer, is also interested in in parts of AIG's Asian life insurance business. The German firm said its direct insurance arm is looking to enter new
markets in Asia and sees the acquisition of AIG's Asian units as a means to do so.

"We are looking at AIG life operations in the Asia region," Ludger Arnoldussen, a member of the management board of Munich Re, told reporters in Hong Kong.

He declined to elaborate other than to say that Munich Re's primary insurance unit, ERGO, was looking to expand in strong emerging Asian markets such as China and South Korea. ERGO's Asian operations are currently limited to India and South Korea.

In China, ERGO was looking at life insurance joint venture opportunities, he said.

"We think the Chinese market is interesting for the primary insurance group, ERGO, so they are looking at opportunities there," Arnoldussen said.  He also reiterated the group's expectation that global reinsurance rates would increase by double-digit levels for January renewals as the financial crisis boosts demand.

Spokesmen at Beijing-based China Life and AIG both declined to comment.

Chinese newspapers including the Southern Daily on Monday quoted China Life President Wan Feng as telling a media briefing the day before that the quality of AIG's insurance business in Asia was good but needed further observation -- as AIG's financial condition might worsen.

AIG, once the world's biggest insurer, plans to sell most operations except for its worldwide property-casualty operations, a private client group, and a stake in part of its Asian life insurance operation, American International Assurance Co Ltd.

Sales of the remainder will go to repay the U.S. government after AIG received a $152 billion bailout from the Treasury Department and Federal Reserve to avoid bankruptcy as it was hit by the subprime mortgage crisis.

Japan's Nikkei business daily reported Friday that a consortium led by China's sovereign wealth fund, which includes Chinese insurers, is in talks to buy a stake in AIG that could be worth up to $10.6 billion. An unnamed China Investment Corp (CIC) executive told Dow Jones Monday it did not plan to buy a stake in AIG.
        
'Quite Attractive'

"AIG's insurance assets in Asia, especially in China, are quite attractive to Chinese insurers that are eager to increase market share and expand overseas," said Peng Yulong, analyst at Guotai Junan Securities Co.

But he added that other companies also want to buy the assets, and "price is also an issue."

AIG's Alico, or American Life Insurance Co, operates in more than 55 countries and has a major presence in Japan.

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Another AIG unit, American International Assurance (AIA), is one of the biggest life insurers in Southeast Asia, with operations in China, Australia, India, Japan, Singapore and Korea. AIA China, wholly owned by AIG, is the country's oldest and biggest foreign life insurer.

About 30 companies, including Chinese firms, are interested in buying AIA's Asia assets, AIA China Vice Chairman Edmund Tse was quoted as saying last week in the 21st Century Business Herald, a Chinese financial newspaper.

AIG has not said how much it expects to get from sales of these businesses.

AIG has said it is under less pressure to sell assets after receiving easier terms and conditions under its expanded government rescue earlier this month.

The company has yet to announce any sales, and if tough credit conditions persist, it may be hard to find buyers willing, or able, to pay AIG's asking price.

"In this market it is really about how much money people have to buy these things. It is really more about the buyer, not the seller" said Paul Newsome, an insurance analyst with Sandler O'Neill.

In the United States, AIG's personal lines business, a 60 percent stake in reinsurer Transatlantic Holdings Inc, and a small insurance operation, Hartford Steam Boiler Inspection and Insurance Co are up for sale, and expected to sell by year end. The personal lines business earns much of its revenues from auto policy sales.

On Monday, AIG spokesman Nicholas Ashooh said branding for the company's online auto insurance platform, currently called aigdirect.com, will revert back to 21st Century, the name it was known as until last year, when AIG bought the approximately 40 percent piece of 21st Century it did not already own.

The company is taking the step ahead of divesting the business. The unit will also cut 6.6 percent of its staff, but did not detail how many positions will be eliminated.

Several offices will also be closed, Ashooh said.

Joshua Shanker, an analyst at Citigroup Global Markets, calculated in a September report that AIG could get between $5 billion and $7 billion for its personal lines business.

Shares of AIG closed up 17 cents to $1.77, far below its 52-week high of $62.29.

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