Five Firms Vying for AIG Japan Units

December 9, 2008

Prudential Financial Inc., Manulife Financial Corp. and three other firms are expected to place competing bids for two Japanese life insurers put up for sale by American International Group Inc, people familiar with the matter said on Tuesday.

Prudential unit Gibraltar Life Insurance Co. and Manulife will bid for AIG Edison Life Insurance Co. and AIG Star Life Insurance Co. The remaining three bidders are a Japanese insurance company and two non-Japanese firms, the people said.

The original deadline for the bidding was set on Dec. 5 and it was then was delayed to Tuesday.

The sources said the bidding process could now close later in the week and AIG is expected to select a buyer by the end of the year.

Saved from bankruptcy by a U.S. government bailout that has now ballooned to about $152 billion, AIG is looking to raise cash by shedding assets globally.

Representatives at Prudential and Manulife in Tokyo declined to comment. AIG was not immediately available for comment.

AIG Edison ranks No.22 in the Japanese insurance industry, with insurance revenue of 407 billion yen ($4.40 billion) as of the end of March.

AIG Star ranks No.23 with revenue of 266 billion yen in March.

Gibraltar Life — which ranks No.14 with revenue of 650 billion yen — will become the sixth largest insurer in the country if its bid succeeeds. Manulife — No.11 with revenue of 794 billion yen — would become the fifth largest.

The country’s top life insurer is Nippon Life Insurance Co. with revenue of 4.9 trillion yen and followed by No. 2 Dai-Ichi Mutual Life Insurance Co. with revenue of 3.1 trillion yen.

AIG has hired JPMorgan Chase & Co., Goldman Sachs and Blackstone Group to advise it globally on asset sales, they said.

Besides the sales of two insurers, AIG is also planning to sell Alico.

A China Investment Corp-led consortium, which includes Chinese insurance companies, was in talks to buy a 49 percent stake in Alico, Japan’s Nikkei business daily reported last month.

AIG was considering a sale on condition it keeps more than 50 percent of voting rights in Alico, or American Life Insurance Co, which has operations in more than 55 countries.

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

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

(Reporting by Taro Fuse, Emi Emoto and Chikafumi Hodo; Editing by Chris Gallagher and David Cowell)

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