UPDATE 2-China Life interested in AIG Asia assets-source

(Adds no comment from AIG, analyst comment, background on planned asset sales, background, update on U.S. asset sales)

By Eadie Chen and Samuel Shen

BEIJING/SHANGHAI, Nov 24 (Reuters) - China Life Insurance Co Ltd (2628.HK)(601628.SS), the world's biggest life insurer by market value, is interested in buying Asian assets of American International Group Inc (AIG.N), a senior China Life executive briefed on the situation said on Monday.

"We want to buy parts of AIG's business, especially those in areas of Asia such as Hong Kong, Singapore and South Korea," the manager told Reuters.

Spokesmen at Beijing-based China Life and AIG both declined to comment.

Chinese newspapers including the Southern Daily on Monday quoted China Life President Wan Feng as telling a media briefing the day before that the quality of AIG's insurance business in Asia was good but needed further observation -- as AIG's financial condition might worsen.

AIG, once the world's biggest insurer, plans to sell most operations except for its worldwide property-casualty operations, a private client group, and a stake in part of its Asian life insurance operation, American International Assurance Co Ltd.

Sales of the remainder will go to repay the U.S. government after AIG received a $152 billion bailout from the Treasury Department and Federal Reserve to avoid bankruptcy as it was hit by the subprime mortgage crisis.

Japan's Nikkei business daily reported Friday that a consortium led by China's sovereign wealth fund, which includes Chinese insurers, is in talks to buy a stake in AIG that could be worth up to $10.6 billion. An unnamed China Investment Corp (CIC) executive told Dow Jones Monday it did not plan to buy a stake in AIG.

'QUITE ATTRACTIVE'

"AIG's insurance assets in Asia, especially in China, are quite attractive to Chinese insurers that are eager to increase market share and expand overseas," said Peng Yulong, analyst at Guotai Junan Securities Co.

But he added that other companies also want to buy the assets, and "price is also an issue."

AIG's Alico, or American Life Insurance Co, operates in more than 55 countries and has a major presence in Japan.

Another AIG unit, American International Assurance (AIA), is one of the biggest life insurers in Southeast Asia, with operations in China, Australia, India, Japan, Singapore and Korea. AIA China, wholly owned by AIG, is the country's oldest and biggest foreign life insurer.

About 30 companies, including Chinese firms, are interested in buying AIA's Asia assets, AIA China Vice Chairman Edmund Tse was quoted as saying last week in the 21st Century Business Herald, a Chinese financial newspaper.

AIG has not said how much it expects to get from sales of these businesses.