The AIA building, where AIG founder C.V. Starr first O BE G established the company in 1919, stands in the historic Bund district, of Shanghai, China

AIG, the insurer selling assets to repay a US government bailout, picked Deutsche Bank AG and Morgan Stanley to handle the initial public offering of an Asian life insurance unit, people familiar with the matter said.

Banks are vying for fees to be made from the dismantling of AIG, which got a US$182.5 billion federal rescue after the company almost collapsed last year from losses tied to subprime mortgages. Chief Executive Officer Edward Liddy has announced more than $6.5 billion of asset sales since the New York-based insurer’s first bailout in September.

The insurer, once the world’s largest, shelved talks with potential corporate buyers of AIA in March because bids were too low, people familiar with the matter said at the time.

AIG, founded in Shanghai in 1919, announced last month it will accelerate efforts to list the unit on an Asian exchange, and separate AIA’s managers and board from the parent company.

Michael West, a Hong Kong-based spokesman for Deutsche Bank, and Nick Footitt, a Morgan Stanley spokesman in the city, both declined to comment today.

Bailout

The sale of AIA may raise as much as $8 billion, two people familiar said last month. That figure assumes selling about 30 percent of the division, they said.

AIA and American Life Insurance Co., known as Alico, are AIG’s biggest non-US life insurance units. AIA operates in China, India, Korea, Australia, Singapore, Malaysia, Thailand, Vietnam and Indonesia. AIG is also seeking to sell or take public Alico.

AIA has more than 20 million customers and more than $60 billion of assets.

AIG was first rescued in September with an $85 billion credit line after a liquidity squeeze caused by credit-default swaps the insurer sold to banks. The bailout expanded to $182.5 billion as the government sought to prevent losses at banks that did business with AIG.

AIA has operated in Asia for 90 years. It has 20,000 employees and 250,000 agents in markets from China to Australia, it said in the May statement. The company sells life, accident and health insurance policies and private retirement planning and wealth management services, according to its website.

Source: Bloomberg