UPDATE 1-AIG's Philippine unit to buy 51 pct of Ayala Life

(Adds details from statement, background)

MANILA Aug 26 (Reuters) - The Philippine unit of American International Group (AIG.N) is acquiring 51 percent of smaller rival Ayala Life Assurance Inc for an undisclosed sum, the insurers said in a joint statement on Wednesday.

Philippine American Life and General Insurance Co (Philamlife), the Philippines' largest life insurer, is a unit of AIG.

Ayala Life, the country's seventh-largest life insurance company, is a subsidiary of Bank of the Philippine Islands (BPI.PS), the country's third-biggest lender by assets and a unit of conglomerate Ayala Corp. (AC.PS).

AIG scrapped plans in March to sell Philamlife and instead decided to fold it into its Asian unit, AIA, which has more than $60 billion in assets.

Philamlife said on Wednesday it is still in the process of becoming part of the AIA Group, pending regulatory approvals.

The deal is also subject to approval by regulators.

Deutsche Bank was the financial advisor to Philamlife and AIA for the transaction while BPI Capital and ING advised BPI. (Reporting by Manolo Serapio Jr.; Editing by Muralikumar Anantharaman)