American International Group  has agreed to sell it's Taiwan life insurance unit for $2.15 billion, a key step in its effort to raise cash after a U.S. government bailout last year saved the company from collapse.

Primus Financial, a new firm founded by Citigroup's former investment banking head in Asia and a Chinese partner, has agreed to purchase Nan Shan Life, AIG said on Tuesday, ending a roughly five-month auction that saw several corporate and private equity bidders pursue the division.

With the Nan Shan agreement sealed, AIG is now focused on raising cash from two other major assets in Asia. Hong Kong-based life insurer AIA is seeking a more-than $2 billion initial public offering while American Life Insurance Co, which generates half its revenue in Japan, is seeking a reported $5 billion in an IPO.

Both companies have also attracted acquisition interest, though nothing yet has materialized.

The sale of Nan Shan, in an auction run by Morgan Stanley, allows AIG to check one business off its list of units to sell, after the United States injected $80 billion in taxpayer money into the company after it nearly collapsed late last year.

Primus, run by former Citi executive Robert Morse, and Hong Kong investment group China Strategic Holdings will pay $2.15 billion for AIG's 97.5 percent stake in Nan Shan, AIG said on Tuesday.

Some analysts and bankers involved in the deal said putting a valuation on the AIG's Taiwan life insurance unit was difficult.

The pricing is tricky. If you just look at the book value of Nan Shan, then the acquisition price is at a 30 percent discount, said Pandora Lee, analyst with UBS.

But for an insurance company, book value is not the only consideration, there are other factors like the people, the products etc, Lee said. So its difficult to say at this point if they've got a good deal or not.

Primus and China Strategic will seek loans from Taiwanese banks to finance the deal.

Primus co-chief executive Wing-fai Ng said in an interview with Reuters previously that Primus plans to use Nan Shan as a base to expand to Hong Kong, Malaysia and Japan.

Nan Shan, which has assets of $46.4 billion, has 36,000 sales agents in Taiwan and a market share of 10 percent with its 10 million customers.

The agreement marks the end of an auction that spanned several months and involved multiple bidders, including private equity firms, such as the Carlyle Group. Primus had been competing in the end with Chinatrust Financial.

(Additional reporting by Rachel Lee and Chyen Yee Lee in TAIPEI and Parvathy Ullatil in HONG KONG; Editing by Valerie Lee)