AIG has made its biggest single repayment yet to the US Government’s bailout, with the sale of Taiwan subsidiary Nan Shan Life for about $US2.15 billion ($2.37 billion).

The buyer is a consortium of Hong Kong-based financial services company Primus Financial Holdings and Hong Kong investment company China Strategic Holdings.

Under the deal, AIG’s current management team will stay in place and the Nan Shan brand will remain for at least two years.

Established in 1963, Nan Shan is the third largest life insurer in Taiwan by gross written premium, with 4 million policyholders.

The consortium says the aim is to develop a leading Taiwan-based, pan-Asian financial services company.

Funding for the acquisition will be through a convertible note placement and debt. AIG expects to recognise a loss of about $US1.4 billion ($1.5 billion) on the sale.

Last month total outstanding assistance in the US Government’s AIG rescue stood at $US120.7 billion ($132.2 billion), although the company’s outstanding debt and equity repayments are $US83.6 billion ($91.6 billion), taking into account $US37.1 billion ($40.6 billion) that is owed by financing entities created by the Federal Reserve to buy value-impaired assets from AIG and its counterparties.