THE old saying that life insurance is sold, not bought, has never been truer than for AIA, AIG's Asian life-insurance business, which is embarking on its third attempt to sell itself this year. A listing in Hong Kong was approved on September 21st, meetings with big institutional investors began on the 27th, and the public offering is expected to take place on October 29th.

Getting the deal done will be something of an achievement given how inept the American insurer and its government handlers have been so far in dealing with the dispersal of its Asian operations. An initial attempt to list AIA was pulled in March in favour of an outright sale to Prudential, a British insurer. That deal collapsed in June because Prudential had trouble raising the money to pay.

A similar path has been followed for the sale of AIG's Taiwanese life-insurance operations. A deal announced last October was finally abandoned earlier this month when the buyer's murky financing and potential ties to the Chinese mainland fell foul of Taiwan's regulators. The botched deals have created uncertainty among employees and potential customers, a particularly toxic condition for insurance companies.

To ensure the AIA listing does go through this time, extraordinary steps have been taken. AIG has hired 11 investment banks as “bookrunners” and four others as “global co-ordinators” to head the sale. Putting all the big investment banks on the payroll reduces the likelihood that any facet of the deal will be criticised by analysts, but the banks' overlapping client coverage means that it will do little to increase demand for the shares. Worse still, to generate the amount of commissions needed to satisfy such a large pool of banks, the offering size may be stretched and its price diminished.

Prize assets

Such convoluted steps are a pity given the underlying strength of what is being sold. AIG went bust during the financial crisis because of long-standing mismanagement of a derivatives business; but its Asian operations are a remarkable collection of assets. AIA is the leading life insurer in Hong Kong, Singapore, Thailand, the Philippines, Macau and Brunei; the largest foreign-owned life insurer in China; and among the top three life insurers in Indonesia. In Malaysia it is said that when a baby arrives so does an AIA agent to sell products tied to financing education.

All of these Asian operations are wholly owned, a position that under current regulations would be difficult if not impossible to replicate in Malaysia, Thailand, Indonesia and China. No other insurer has similar scope. Asia's rising prosperity and the emergence of a vast population eager to put aside money for the future create a remarkable opportunity for companies that sell investments through a sales force. If it did not have to repay so much money to American taxpayers, AIG would presumably be clinging tightly to such a collection of prize assets.

The strength of AIA's prospects is demonstrated by the fact that, even during a period of uncertain ownership and churning management, it has continued to grow. The prospectus is expected to predict that the firm's operating profits will exceed $2 billion this fiscal year, a record. Revenues are expected to have risen by 14%, a powerful performance even if some competitors, notably the Chinese life insurers, are growing twice as fast. Prudential, through its own substantial Asian operations, was aware enough of AIA's potential to launch its own, ultimately unaffordable bid. Such a strong position in such a high-growth market really should not be this hard a sell.