UPDATE 1-JC Flowers,Fubon eye bid for AIG Taiwan unit-sources

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By Michael Flaherty and Rachel Lee

HONG KONG/TAIPEI, June 19 (Reuters) - Several U.S. private equity firms and Taiwanese financial groups are showing early interest in the sale of AIG's Taiwan life insurance unit, banking sources said on Friday, in a deal the seller hopes could raise around $2 billion.

U.S. private equity firm JC Flowers & Co. and Taiwan's Fubon Financial (2881.TW) were expected to pursue a bid for the unit, Nan Shan Life, according to sources close to the process.

The official auction for the business began within the last week, sources said, with sellside adviser Morgan Stanley (MS.N) distributing key financial data to potential buyers.

U.S. private equity firm Kohlberg Kravis Roberts & Co. was also expected to participate in the auction, the sources told Reuters.

JC Flowers did not immediately return a message. The fund is focused on financial sector deals and run by former Goldman Sachs banker Christopher Flowers. KKR declined to comment.

Another Taiwanese competitor, Cathay Financial (2882.TW), was also seen as possible bidder, according to the sources.

Executives at Fubon declined comment, while Cathay officials were not immediately available for comment.