UPDATE 2-PICC says AIG has no intention of selling PICC shares

* PICC shares fall 10 percent on poor 2008 results

* Says AIG will notify PICC if wants to sell stake

* Sees profit to rise in 2009

* Credit Suisse cuts PICC to neutral (Adds chairman comments and updated share price)

By Clare Jim

HONG KONG, April 16 (Reuters) - PICC Property & Casualty (2328.HK), China's top non-life insurer, said on Thursday American International Group (AIG.N) has no intention of selling its stake in the Chinese insurer.

But shares of PICC fell nearly 10 percent on Thursday, as investors were disappointed by its forecast-lagging earnings.

PICC, which reported a 98 percent plunge on its 2008 net profit, is confident that earnings will rise in the coming years, Chairman Wu Yan told reporters.

"The company's performance in the second half was better than the first half despite a very tough market situation, so we are confident that our profits will rise in 2009 and after," he said.

PICC reversed a loss in the first half and posted net profit of 342 million yuan for the six months ended December 2008. That compared with a loss of 197 million yuan in the same period last year and average forecast of 1.17 billion yuan profit from 5 analysts polled by Reuters Estimates. The figures were derived by deducting first-half figures from the full-year as the company did not provide a breakdown for the second half.

For full year, it posted a net profit of 50 million yuan versus 2.99 billion yuan in 2007 due to higher underwriting losses and lower investment income.

Wu also said PICC's investor, AIG, had no immediate plan to sell its stake in the company.

"AIG has showed strong interest in keeping a long-term co-operation relationship with us and has no intention to sell down its stake at the moment," he said, adding AIG will notify the company if it decides to sell PICC shares.

AIG, which has a 9.9 percent stake in PICC, can sell its PICC stake freely after a lock-up period of the stake expired last October.

The U.S. insurer is trying to sell off assets in a bid to pay back the government, and last week its chief executive, Edward Liddy, said AIG had reached agreements to sell 10 businesses despite "the most challenging market environment in memory".

However, analysts say PICC is facing a challenging 2009 and its stock has been trading at full value.