AIG’s sale of its Taiwan life assurance unit to a Hong Kong-based consortium for $2.15bn was blocked by Taiwanese regulators yesterday following months of uncertainty and protracted negotiations. The move is a setback for the American insurer, which had hoped to use the sale of its Taiwan unit Nan Shan to raise funds to pay back loans following a US government rescue in 2008. It follows the collapse in June of AIG’s efforts to sell AIA, its main Asian unit, to Prudential after the UK insurer withdrew its $30bn-plus offer for the business. “It will not be easy for AIG to find a buyer that meets Taiwan’s requirements. It will take time,” said Joyce Huang, a Taipei-based insurance analyst with Fitch Ratings. The Hong Kong-based consortium, which consists of China Strategic Holdings and Primus Financial Holdings, initially struck a deal with the American insurer last October to acquire its Taiwan unit. The Taiwanese authorities, who formally accepted the proposal in January, repeatedly requested information from the consortium and assurances from Nan Shan amid concerns that the consortium was backed by mainland funds and had political ties with Beijing. Chinese investment in Taiwan is strictly controlled amid fears of excessive economic dependency on China. However, Hwang Jung-chiou, the vice-minister of economics, yesterday stressed that the sale had been classed as a “foreign” investment case rather than a “Chinese” one. The island’s regulatory agency, the Financial Supervisory Commission, said the Hong Kong-based consortium had failed to demonstrate to regulators that it had sufficient commitment to the long-term operations of Nan Shan and that it had enough financial resources to meet any future needs for increased injections of capital. Wu Tang-chieh, the commission’s vice-chairman, said the Taiwan government hoped to see AIG continue to run Nan Shan and urged the American insurance group to discuss any plans it might have for the business with Taiwanese regulators first.