AIG remains a long-term investor in China's top non-life insurer PICC <2328.HK>, the Chinese insurer said on Thursday, even as the embattled U.S. firm unwinds its holdings in other assets to repay the U.S. government.

The response from AIG is that they are committed to holding our shares, and I hope the two sides will continue to maintain a good relationship, Chief Executive Officer Wang Yincheng told reporters at a news conference to discuss PICC's 2009 results.

AIG is PICC's single-largest shareholder, owning almost a third of the company whose total market capitalization is nearly HK$88 billion ($11.3 billion), according to Thomson Reuters data.

The U.S. insurer has been under pressure to sell off non-core assets to repay the $182 billion bailout it received from the U.S. government during the height of the financial crisis.

PICC on Wednesday reported earnings that exceeded market expectations, helped by strong premium growth and an accounting rule change.

The company said it may also issue subordinate debt to shore up its solvency ratio, hitting its shares in late morning trade. At midday, PICC shares were down 3.55 percent, lagging a 0.4 percent advance on the benchmark Hang Seng Index <.HSI>.

PICC's solvency ratio fell to 111 percent in 2009 from 145 percent in 2008, giving it less leeway in making investment decisions and raising the specter of tighter regulatory oversight.

That is a direction which we are currently working toward, PICC's Wang said, when asked if the company had any plans to issue subordinate debt.

Chinese regulations allow insurers to invest in equities only if they have a solvency ratio of above 150 percent. The China Insurance Regulatory Commission can also ask insurers who have a solvency ratio of between 100-150 percent to take steps to avoid insolvency.

PICC shares are up 12 percent so far this year, beating the flat performance on the big board.

(Reporting by Kelvin Soh and Clare Jim; Editing by Jacqueline Wong)