UPDATE 3-AIG's Taiwan unit gets three low bids -sources

* Three bidders offer below $1.5 bln -sources

* Bain Capital pulls out of bid with Chinatrust-source

* Chinatrust says submitted a bid; plans to raise $1.4 bln

* Analysts say AIG could negotiate on price

(Adds Chinatrust statement)

By Faith Hung and Rachel Lee

TAIPEI, Aug 28 (Reuters) - Three bidders for AIG (AIG.N)
have offered less than $1.5 billion for its Nan Shan Life unit,
far below the $2 billion the insurer had expected, sources close
to the companies said on Friday, throwing the sale into doubt.

Friday was the deadline for the second-round bidders to
submit their offers for the insurance unit.

Taiwan's Cathay Financial (2882.TW), the consortium of
Primus Financial and China Strategic (0235.HK), and Carlyle
Group [CYL.UL] and Tawainese partner Fubon Financial (2881.TW)
have each submitted a bid of less than $1.5 billion, the sources
said.

The sources did not wish to be identified because of the
sensitivity of the matter.

In addition, private equity firm Bain Capital has pulled out
of its joint bid with Chinatrust Financial (2891.TW), Taiwan's
top credit card issuer, said a different source close to one of
the companies.

Chinatrust Chief Investment Officer Daniel Wu declined to say
whether the firm was bidding on its own or with a partner.

However, late on Friday Chinatrust released a statement
saying that it had submitted a bid for Nan Shan. It also said
that it planned to raise up to T$47 billion ($1.4 billion) via a
private placement based on Friday's closing price of T$18.8, but
did not give any further details.

The other bidders and Nan Shan could not be immediately
reached for comment.

PRICE, UNION DISPUTES EYED

The high price tag and growing pension disputes with Nan
Shan's union could once again derail AIG's plan to sell the
Taiwan unit after an attempted sale was scuppered earlier this
year, some of the sources said.

For a related DEALTALK, click on [ID:nTP344355].

Analysts said that with the bids below its expectations so
far, there was a good chance that AIG, once the world's biggest
insurer before being battered by the global financial crisis,
might fail to pin down a buyer for Nan Shan, its most expensive
asset for sale in Asia.

They said that if the unit is not sold in this round, AIG
would be forced to negotiate the price with the potential buyers
or have to hold another bidding round.

"There might be a 50 percent chance that AIG will not agree
to sell Nan Shan in this round," said one of the sources who
spoke about the bids.

An analyst from a European securities house who requested
anonymity was less optimistic.

"It is very likely AIG would not be able to find a suitable
buyer this round," the analyst said.

"Of course, AIG has every intention to talk to the three
groups later, and ask them to raise their prices. But what would
AIG offer in exchange for a higher price? That remains to be
seen," the analyst said.

There have been a number of foreign financial services
company to exit Taiwan since the global crisis began.

Last October, Holland's ING Groep (ING.AS) sold its
insurance unit to Fubon, while Britain's Prudential (PRU.L)
offloaded most of its Taiwan assets to Taipei-based China Life
(2823.TW) earlier this year.

The sales were part of ING and Prudential's efforts to shore
up their finances at home during the global financial crisis.
(Additional reporting by George Chen and Michael Flaherty in
Hong Kong; writing by Lee Chyen Yee; editing by Karen Foster)