AIG's planned sale of its Taiwan unit, Nan Shan Life Insurance, was rejected by the Financial Supervisory Commission earlier this week due to concerns over the financial capability of Primus, the potential acquirer. But Primus may still issue an appeal within 30 days to keep its acquisition bid alive.

Officials from the Ministry of Economic Affairs Investment Commission have been reviewing the Nan Shan Life Insurance case for more than a year, eventually releasing its verdict.

Primus, a financial holding company showing a high degree of willingness to purchase Nan Shan Life has been ruled out due to the Investment Commission's finding that the shareholding of this company has seen frequent changes leading it to become ineligible to purchase Nan Shan.

Primus has sparked constant controversy, including external challenges, as the company has Chinese investment and this has raised political concerns.

Nan Shan internally had misgivings about a potential sale to Primus as the hiring of employees and other employee benefits had yet to be resolved, leading to constant criticism.

The FSC also stressed that the decision regarding Primus did not involve Chinese capital, but the fact that application materials regarding shareholding contained many changes, leading to worries about raising capital and its operation of Nan Shan.

While this sale of Nan Shan has fallen through, there are still many domestic companies interested in acquiring the company.

Nan Shan's labor union wants the buyer of the company to protect the rights of staff and more than 30,000 insurance salesmen.

The FSC hopes that AIG will continue to run Nan Shan and continue to provided unaltered operations for the more than 4 million Nan Shan Life Insurance policy holders.

By law, Primus has 30 days to petition to the Ministry of Economic Affairs to overturn this ruling.