CORRECTED-DEALTALK-AIG's sale of AIA stake faces tough slog

jueves 29 de enero de 2009 09:39 CET

(Corrects to show Clarkson is from S&P in paragraphs 4 and 22, not Fitch)

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By Michael Flaherty

HONG KONG, Jan 23 (Reuters) - In a downward spiraling Asian market, American International Group's (AIG.N: Cotización) sale of a minority stake in its more than $20 billion life insurance business faces an uphill climb.

Hong Kong-based American International Assurance Company Ltd. (AIA) has a long history in the region, particularly in China, and has dominant market share in several, fast-growing countries. That's an enticing prospect for any buyer bullish about not just the company's future, but Asia broadly.

But several challenges await the process, including falling demand across the insurance industry, lack of funding for buyers, and short-term economic outlook that is anything but bright.

"It's true that it's tough times at the moment," said Standard and Poor's director Paul Clarkson, who covers insurance companies. "The life insurance industry is facing the same problems as elsewhere. Investment linked products are gone at the moment. Bank assurance has dried up. New business is down."

The plans to sell up to 49 percent of AIA were put in place last fall, shortly after the U.S. government saved AIG from bankruptcy in September with a rescue plan that has since ballooned to about $152 billion. Reuters reported in October that Citigroup and Goldman Sachs were advising AIG on its Asia sales.

The formal AIA auction is set to begin in the next few weeks, sources with direct knowledge of the matter say.   Continuación...