UPDATE 1-Taiwan regulator rejects AIG unit sale

* Says bid does not comply with laws on Chinese investment

* AIG will have to put the unit back on sale -analyst
(Adds comment, details)

TAIPEI, Aug 31 (BestGrowthStock) – Taiwan regulators rejected AIG’s
(AIG.N: ) planned $2.2 billion sale of its Taiwan unit to a
China-related group, citing regulations on mainland investment,
and leaving the insurer facing another auction.

American International Group, needing to sell assets to pay
back the U.S. government for a bailout, first agreed to sell the
Nan Shan unit last October, but suspicions in Taiwan about the
connections of buyer China Strategic (0235.HK: ) with China and
concern it could not run an insurance business held up the deal.

The economics ministry said on Tuesday that the deal did not
comply with Taiwan’s rules on investment from its political foe
China, and also noted the lack of experience in insurance on the
part of battery maker China Strategic and its bid partner, Hong
Kong investment firm Primus.

“It did not come as a surprise,” said an analyst at a
European financial institution, who asked not to be identified.

“AIG needs to pay back money to the U.S. government so
ultimately it will have to sell the unit.”

The ministry said China Strategic is able to appeal the
decision within 30 days. Taiwan’s top regulator, the Financial
Supervisory Commission, will hold a media briefing at 0900 GMT to
talk further on the decision.

“It is reasonable that the FSC took a more cautious attitude
in reviewing this case as it requires more in-depth levels of
skill to run an insurance company’s finances and management,”
said Susan Chu, a vice president at Standard & Poor’s in Taiwan.

AIG will find Taiwanese bank Chinatrust Financial (2891.TW: )
waiting in the wings to bid for Nan Shan. The bank, Taiwan’s top
credit card firm, has repeatedly said it wants to buy Nan Shan
after coming second to China Strategic in the original bid in

On Monday a retired Taiwanese diplomat, who said he wanted to
“save” Nan Shan from mainland Chinese hands, said he was lining
up a bid, backed by unnamed Japanese and Qatari investors.

AIG and China Strategic were not immediately available for
comment following the decision.

China Strategic’s shares were suspended in Hong Kong after
the announcement.
(Reporting by Argin Chang, Faith Hung and Rachel Lee; Writing by
Jonathan Standing; Editing by Ken Wills)

UPDATE 1-Taiwan regulator rejects AIG unit sale