Chinatrust Financial, Taiwan's top credit card issuer, offered $2.4 billion for AIG's Taiwan Nan Shan Life unit, outbidding rivals, a source with direct knowledge of the situation told Reuters on Saturday.
Primus Financial, which was competing head-on with Chinatrust in acquiring Nan Shan, gave up on its pursuit after Chinatrust raised its bid to T$80 billion ($2.4 billion), said the source, who is involved in the negotiations.
Paying that much is suicidal, the source said, referring to Chinatrust's offer. It is 100 percent certain Primus is not in the game any more, he told Reuters via phone.
Chinatrust's latest bid was above market expectations and was better than the $2 billion target American International Group (AIG) had expected for Nan Shan, its most expensive asset for sale in Asia so far.
Three other bidders, including Primus Financial and China Strategic, the Carlyle Group and Fubon Financial, and Cathay Financial, had offered less than $1.5 billion each, sources close to the companies said late in August.
In an interview with Reuters in August, AIG's new chief executive officer Robert Benmosche had said he did not favor shedding assets at any price.
Officials of Chinatrust and Morgan Stanley, the financial advisor on the Nan Shan deal for AIG, declined to comment.
New York-based AIG is under pressure to repay more than $80 billion in U.S. bailout loans extended last year, when the insurer nearly collapsed under the weight of mortgage-related derivative losses.
Shares of Chinatrust ended up 1.58 percent on Friday, while the main index rose 0.68 percent. ($1=T$32.9)
(Editing by Lee Chyen Yee and Ruth Pitchford)