China fund eyes 49% stake in AIG

Tokyo: A consortium led by China's sover-eign wealth fund is in talks to buy a 49 per cent stake in US insurance firm American International Group (AIG) unit American Life Insurance Co (Alico) in a deal that could be worth up to $10.6 billion, Japan's Nikkei business daily reported on Friday.

The paper said AIG was holding preferential talks with the China Investment Corp-led (CIC) consortium, which includes Chinese insurance companies, with a year-end deadline.

Such a deal could open the way for China to become a major player in the global insurance market.

A spokeswoman for CIC declined to comment.

A senior official of CIC, a $200 billion (Dh735 billion) sovereign wealth fund, said last week that China and other developing countries should be given more influence in the global financial system if they provide money to help resolve the world's economic crisis.

Jin Liqun, CIC's supervisory board chairman, said the fund would continue to expand its investment overseas. Nikkei said AIG was considering a sale on condition it keeps more than 50 per cent of voting rights in Alico, which has operations in more than 55 countries.

Cost

Based on Alico's business value, the acquisition of a 49 per cent stake could cost the Chinese investors between 500 billion yen and 1 trillion yen (Dh19.23 billion to Dh38.46 billion), Nikkei said.

AIG, once the world's biggest insurer by market value, averted bankruptcy in September with an $85 billion bailout, but the aid ballooned to $152 billion when it became clear the amount would not be enough.

AIG has said it plans to sell everything except its US property and casualty business, foreign general insurance and an ownership interest in foreign life operations.