Worries over asset quality at Asian unit of AIG caused China Life to turn away

China Life has withdrawn from bidding for the Asian unit of AIG, and the reason is worries about its quality, the chairman of the Chinese insurer was quoted as saying by news agency Reuters.

"We are no longer bidding for AIA. AIA's asset quality, business direction and brand have all changed," China Life Chairman Yang Chao was quoted as saying.

Li Kemu, vice chairman of the China Insurance Regulatory Commission, said last week that Chinese firms would decide on purely commercial grounds whether to bid for AIA, while adding that the regulator had a favorable view of its assets, especially in China and Hong Kong. Last Friday was the deadline to submit bids for American International Assurance Company Ltd, which has been valued by some observers at roughly $20bn.

Plans to sell up to 49 percent of Hong Kong-based AIA, considered AIG's crown jewel in Asia, were put in place last fall shortly after the U.S. government saved AIG from bankruptcy. But hopes for an auction have faded, as economic conditions have worsened since the sale began. Recently, AIG has received additional financial support from the US government and announced it would be transferring its interests in AIA to the Fed in return for additional cash.