Primus Financial has won the bid for AIG's Taiwan insurance unit Nan Shan Life at $2.2 billion with a contract to be signed on Friday, a local newspaper reported on Tuesday.

Primus beat Chinatrust Commercial after agreeing to a series of conditions set out by AIG that included a guarantee on employee pension funds and maintaining service standards, the Chinese-language Economic Daily reported, citing unidentified sources.

Chinatrust had put in a higher bid, the newspaper said, but lost as the Taiwanese firm wanted AIG to guarantee employee retirement funds and any future debt.

The report also said that both AIG and Primus would fork out an extra T$10 billion ($309 million) to be placed into a staff welfare fund.

Officials at AIG and Primus Financial were not immediately available for comment.

The winning bid exceeded most market expectations and the $2 billion target American International Group set for Nan Shan, its most expensive asset for sale in Asia so far.

In September, sources told Reuters that Chinatrust Financial have offered $2.4 billion for Nan Shan, outbidding rivals.

New York-based AIG is selling its assets as part of a reorganization plan 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.

(Reporting by Kelvin Soh; Editing by Jonathan Hopfner)