While four groups have submitted bids for American International Group Inc.'s (AIG) Taiwan unit, the apparent low prices being offered could prove an early test of AIG's new resolve not to sell assets cheaply.

Hong Kong-based investment company Primus Financial Holdings Ltd., co-founded by ex-Citigroup Inc. banker Robert Morse, has teamed up with Hong Kong-listed China Strategic Holdings Ltd. (0235.HK) to make a bid for Nan Shan, Taiwan's third-largest life insurer by gross premiums, people familiar with the situation said. Fubon Financial Holding Co. (2881.TW) is partnering with U.S. private equity firm Carlyle Group L.P., the people said.

Chinatrust Financial Holding Co. (2891.TW) said in a statement that it had decided to bid for AIG's 97.57% stake in Nan Shan, but wouldn't divulge whether it was bidding alone or with a partner. Cathay Financial Holding Co. (2882.TW) had made a bid on its own, it said.

The bid amounts weren't immediately available, although Nan Shan had been valued at around US$2 billion when it was put on the sale block earlier in the year.

Bids are likely to be lower than that, people familiar with the situation said, amid demands of pension withdrawals from Nan Shan agents. A host of insurance policies guarantee returns hang over interest in the Taiwan company, two people said last week. A person familiar with Primus told Dow Jones Newswires earlier this week that the company values Nan Shan around US$1.3 billion.

Shares of AIG have soared recently following aggressive remarks from new chief executive Robert Benmosche, who has said the troubled insurer is in no hurry to sell prized assets to repay the US$173 billion in government bailout funds. After rising nearly 27% in Thursday U.S. trading, AIG shares were up another 9% premarket Friday on heavy volume.

"Once the market gives us a price that I think is fair, we can go forward," Benmosche told The Wall Street Journal late this week. "If we sell too soon, everyone loses."

He said he is willing to wait as long as three years to offer stakes in two multibillion-dollar foreign units that the insurer had been racing to spin off.

How AIG reacts to the low bids for its Taiwan unit could show whether it will follow through on that new strategy. Previously, AIG had sought to sell units as soon as possible.

 
   Nan Shan Pension-Fund Withdrawals

AIG said last week that Nan Shan's 35,000 agents in Taiwan can withdraw 27% of their pension fund, and they can also jointly manage their pensions.

Friday is the deadline for interested parties to submit bids for Nan Shan, and the winning bidder will be notified on Sept. 4, people familiar with the deal said.

All four corporate bidders had passed the first round of bids in early July. After that round of bids, investment bank Morgan Stanley (MS), which is running the sale process, told private equity bidders that they needed to partner up with domestic financial institutions to stay in the race. Cathay Financial was the only bidder that was allowed to go solo, people familiar with the situation said earlier.

The forced marriage between bidders and ongoing disagreements about price led private equity funds like Bain Capital LLC, MBK Partners Ltd. and Oaktree Capital Management LLC to drop out of the race, they said. Previously, the financial regulator said any private equity firm interested in Nan Shan should have a track record of running an insurer. Carlyle, for instance, has extensive insurance investments, including a 17.3% stake in China Pacific Insurance (Group) Co.

Fubon acquired ING Groep NV's (ING) Taiwan life insurance business for US$600 million in October last year.

-By Perris Lee and Aries Poon, Dow Jones Newswires; 852-2832-2332; aries.poon@dowjones.com

(Amy Or and Lavonne Kuykendall contributed to this story.)