By Lawrence Agcaoili

THE Philippine American Life and General Insurance Co. is no longer for sale?at least not for now?after its parent, American International Group Inc., decided to hand a preferred interest in American International Assurance Co., its large Asian business, to the US government.

The New York-based insurance giant made the decision after receiving a fresh $30-billion capital infusion from the US government?and days after Manulife Financial Corp. of Canada submitted an offer for AIA, hoping it had bought itself time to wring out a better price out of Manulife and the other bidders for the Asian offshoot.

Sources from the local insurance industry said AIG put Philam Life?s sale on hold following the dismal offers made by potential buyers last week.

They said the offers were way below the asking price of the US insurance giant, which is selling off some of its units?including Philam Life?to pay off the US government.

AIG received $60 billion from the US government initially to save it from collapse after it posted a net loss of $61.7 billion in the fourth quarter last year due to massive restructuring and write-downs.

Banco de Oro Unibank and Assicurazioni Generali SpA, the Ayalas? Bank of the Philippine Islands and Prudential Life of the UK, and Manulife have reportedly submitted bids for Philam Life, the Philippines? largest insurer.

An official of one of the companies that submitted bids for Philam Life was surprised by AIG?s decision.

?We were not informed about the decision to scrap the sale of Philam Life. We just heard it on the news,? said the official who refused to be identified.

Philam Life officials refused to comment, saying they were bound by disclosure rules.

While AIG has temporarily stopped the sale of Philam Life, it had agreed to sell its PhilAm Savings Bank Inc., PhilAm Auto Finance & Leasing Inc., and PFL Holdings Inc. to East West Banking Corp., which is owned by businessman Andrew Gotianun, for $48.5 million.

Philam Life?s gross premiums reached a record P22.7 billion in 2007 as its life insurance business generated P7.4 billion in new business.

The company?s consolidated assets stood at P170.0 billion while stockholders? equity amounted to P49.5 billion.

Investment income increased 3.1 percent to P9.4 billion, while total revenues reached P36.7 billion. Its net income rose 15.8 percent to P4.8 billion.

Meanwhile, former AIG chief executive Maurice Greenberg has accused the insurer in a lawsuit of securities fraud after it reported the biggest loss by a publicly traded US firm.

Greenberg sued in federal court in Manhattan on Monday, saying the company?s ?material misrepresentations and omissions? caused him to acquire AIG shares in his deferred compensation profit-participation plan at an ?artificially inflated price.?

The complaint came on the same day that AIG chief executive Edward Liddy told Bloomberg News that Greenberg was at the helm during the formation of AIG?s financial products unit, which sold derivatives that cost the company more than $30 billion in write-downs and prompted a government rescue. With Bloomberg