Prudential unit to bid for AIG Japan units -sources

By Emi Emoto

TOKYO (Reuters) - A Japanese unit of Prudential Financial Inc (PRU.N) plans to bid for two Japanese life insurers put up for sale by American International Group Inc (AIG.N), people familiar with the matter said.

Saved from bankruptcy by a U.S. government bailout that has now ballooned to about $152 billion, AIG is looking to raise cash by shedding assets globally.

AIG's push to sell assets was underscored by comments from chief executive Edward Liddy to the Wall Street Journal. Liddy said in an interview that AIG will try to renegotiate the terms of its rescue package if it can sell off assets to repay the government.

The insurer has said it will sell its three Japanese life insurance businesses -- Alico Japan, AIG Edison Life Insurance Co and AIG Star Life Insurance Co.

Prudential unit Gibraltar Life Insurance Co will bid for AIG Edison and AIG Star, three sources told Reuters. The individuals spoke on condition of anonymity because the bidding process is not public.

The sale could fetch several hundred billion yen, the Nikkei business daily has reported.

Spokespeople for Prudential Financial and AIG in Tokyo declined to comment.

Although its population is shrinking, Japan is still seen as a growth market by some overseas financial firms.

Thanks to a culture of frugality, Japanese household savings are now estimated at a staggering $16 trillion. The desire to tap that pool has brought in big overseas financial firms such as HSBC Holdings Plc (HSBA.L) and Citigroup Inc (C.N).

Insurers have also been drawn by the country's rapidly ageing population. U.S. firm Aflac Inc (AFL.N) has made an aggressive push in recent years, blanketing the country with advertisements for insurance products.

With insurance revenue of 407 billion yen ($4.37 billion), AIG Edison ranks No.22 in the Japanese industry. AIG Star ranks No.23 with revenue of 266 billion yen.

AIG has hired JPMorgan Chase & Co (JPM.N) and Goldman Sachs (GS.N) to advise it globally on asset sales, while Prudential is using Nomura Securities to help it weigh a bid for the AIG operations, sources said.

A deadline for the bidding has been set for Dec. 9, the sources said. It was not immediately clear whether Gibraltar was the sole bidder or other potential buyers were involved.

($1=93.14 Yen)

(Additional reporting by Nathan Layne, Yumiko Nishitani and Dave Dolan; Editing by Michael Watson)