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Sovereign wealth fund China Investment Corp. (CIC) is in talks with struggling U.S. giant American International Group to acquire a stake of up to 49 percent in unit American Life Insurance Co. (Alico), according to a media report.
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AIG (NYSE:AIG) is currently negotiating with the CIC-led consortium and have set the end of the year as their deadline to reach a decision, Japanese business daily Nikkei said on its website. The consortium also includes Chinese insurance companies.
Citing sources familiar with the matter, Nikkei said if the parties are unable to agree on details, the negotiations could end without a deal.
The report said a deal could open the way for China to become a major player in the global insurance market. It noted that Alico has operations in more than 55 countries, including Japan.
AIG is said to be considering the offer, as long as it keeps more than 50 percent of voting rights in Alico.
Based on Alico's business value, the acquisition of a 49 percent stake would likely cost the Chinese investors between 500 billion yen ($5.1 billion) to 1 trillion yen, the report said.
Citing Alico's future growth potential, AIG is said to be considering a sale on the condition that it will keep more than 50 percent of voting rights in the firm, thereby allowing it to maintain management control.
AIG said earlier in October it would sell Japanese subsidiaries AIG Edison Life Insurance Co., AIG Star Life Insurance Co. and Alico Japan.
The sale of the three companies had been expected to spur off an intense bidding war among domestic and overseas insurance companies. However, major Japanese insurers showed caution about acquiring the units, as tumbling Japanese share prices have negatively affected their own financial situations.
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