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UPDATE 1-AIG to halt merger between Japan units due to sale

Tue Dec 23, 2008 10:14pm EST

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(Updates with the companies' announcement)

Stocks  |  Mergers & Acquisitions

TOKYO, Dec 24 (Reuters) - U.S. insurer American International Group (AIG.N) said on Wednesday that it would halt the merger between its two Japanese life insurers, AIG Star Life Insurance and AIG Edison Life Insurance.

AIG, once the world's largest insurer, said in October that it would postpone the merger between AIG Star and AIG Edison, which was originally scheduled to take place on January 1, 2009.

But the merger process is now officially on hold as AIG plans to sell shares in AIG Star and AIG Edison along with American Life Insurance Co (ALICO) under its global restructuring plans, said AIG in a statement.

"The merger should reflect the intention of new shareholders," AIG said in a statement.

AIG has been trying to sell assets after nearly collapsing in September and has said it plans to sell its businesses in Asia including Japan, Taiwan and the Philippines.

(Reporting by Mariko Katsumura)

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