(Adds confirmation from source, quotes, details)

By Faith Hung

TAIPEI, Nov 10 (Reuters) - American International Group Inc
(AIG.N: Quote, Profile, Research) is aiming to sell its 95 percent stake in Taiwan life
insurer Nan Shan Life, a source said on Monday, in a deal that
local media estimated would be worth $2-2.5 billion.

The troubled insurer planned to unload the unit as soon as
the first quarter of next year, said the source, who is
familiar with the deal and spoke on condition of anonymity.

"One of AIG's priorities is to raise cash to pay back its
debts, and the company wants to do that as soon as possible,"
the source told Reuters by telephone.

"The global financial environment has been tough though,
making it hard for them to sell Nan Shan at a satisfactory
price," said the source.

AIG had decided to sell its entire stake in Nan Shan for
$2-$2.5 billion as it tries to lure potential buyers such as
Cathay Financial (2882.TW: Quote, Profile, Research) and Fubon Financial (2881.TW: Quote, Profile, Research), the
Economic Daily newspaper said, citing unnamed market sources.

Previously, AIG had only wanted to sell a 49 percent stake,
local media said.

Nan Shan officials could not be reached for comment.

Cathay Financial, Shin Kong Financial (2888.TW: Quote, Profile, Research) and Fubon
Financial -- AIG's major competitors in Taiwan -- were
approached by investment banks including Citigroup (C.N: Quote, Profile, Research),
officials from the companies said.

AIG has hired Citigroup and Goldman Sachs (GS.N: Quote, Profile, Research) to advise
on the sale of the unit, local media said.

Mega Financial (2886.TW: Quote, Profile, Research), the island's No.3 financial
holding firm, and Shin Kong said recently they were not
interested in buying Nan Shan.

AIG would not be the first troubled global insurer to get
rid of its assets to raise cash.

Fubon said last month it would acquire ING's (ING.AS: Quote, Profile, Research)
insurance business in Taiwan for $600 million, a day after the
Dutch financial group secured a 10 billion euro ($13.5 billion)
government cash injection. [ID:nTPU000762]

Cathay Financial would not make a decision until AIG is
final on details such as pricing, a Cathay official said.

On Sunday night, AIG's board was nearing approval of a
revised U.S. bailout to replace a previous $85 billion rescue,
a person familiar with the matter said. [ID:nN09413600]
Nan Shan had previously said it planned to raise T$47.22
billion ($1.45 billion) by selling new shares to AIG, as Taiwan
insurers scramble to raise new funds as portfolio values
plummet. [ID:nTP347169]
(US$1=T$32.8)
(Editing by Alex Richardson)