HONG KONG (Reuters)—American International Group Inc. is to speed up plans to list its Asian subsidiary through an initial public offering that could raise more than $4 billion, as the bailed-out U.S. insurer seeks to raise cash to pay back government loans.

The IPO would also allow the profitable Asia life insurance subsidiary, American International Assurance Co. Ltd., to break from its ailing parent.

The at least $4 billion initial public offering, based on targets set by AIG executives, would make it the largest Hong Kong IPO since China Citic Bank Corp. raised $4.2 billion in April 2007, according to Thomson Reuters data.

After AIG failed to sell a large stake in AIA earlier this year, the insurer said it would continue to seek a buyer or launch an IPO. A statement on Monday was the first official sign from AIG that steps toward a listing are underway.

AIG said it has asked for requests for proposal to select global coordinators and bookrunners for the IPO, confirming a Reuters report last Thursday.

Blackstone Group, AIG's global financial adviser for its restructuring, will manage the IPO, the insurer said. Most major investment banks will pitch their plans to co-manage and underwrite the IPO, which will generate huge fees if successful.

Hong Kong-based AIA has more than $60 billion of assets under management. Last year, AIA said it recruited more than 52,000 agents, bringing the total to about 250,000 agents. It has about 20,000 employees across 13 Asian markets.

AIA is regarded as AIG's Asia crown jewel, a 90-year-old business providing coverage to about 20 million customers, or close to one-third of AIG's total customer base.

Still, analysts say that even with bright prospects, the IPO faces plenty of obstacles. AIG itself said the offering depends on market conditions and regulatory approval.

"We need to remember that AIA will be up against the China growth story," said Patrick Yiu, associate director with CASH Asset Management.

"Anybody who wants exposure to the insurance sector has the choice of buying China Life (Insurance Co. Ltd.) and Ping An (Insurance Co. of China Ltd.). So, unless the terms of the IPO are very attractive, it may not be a huge success," he said.

AIG said it would seek to list AIA on an Asian exchange. CEO Edward Liddy has told Reuters the company is leaning toward a Hong Kong IPO in the first half of 2010. AIA and AIG would have separate boards and management teams.

A public listing would coincide with a Hong Kong IPO market that is showing renewed signs of life, with several large offers recently and more in the pipeline. China Zhongwang Holdings last month raised $1.3 billion in the world's biggest IPO so far this year.

"Today's announcement represents a clear and formal roadmap for our independence," Mark Wilson, President and CEO of AIA Group, said in a statement.

AIG tried to sell AIA privately last year for up to $20 billion, but it failed to find a buyer willing to pay that price. AIG has suggested it could initially sell up to one-fifth of AIA's market value in an IPO.

"Markets are very sensitive right now, especially with U.S. corporations. Although AIG's Asian business (has) almost nothing to do with the U.S., its tradition is with AIG," said Alfred Chang, chief dealer with Cheer Pearl Investment Ltd.

"I think in general, though, because liquidity is still good in Asia, this IPO will be successful."AIG was founded in 1919 in China and was the first foreign insurer given the green light to reestablish itself there when the Communist government began to reopen the borders to outside business. Its headquarters were later moved to New York.

AIG was rescued with U.S. government funds in September after bad bets involving subprime mortgage-related securities left it deeply in the red and on the brink of bankruptcy. The company was forced to sell off assets.

Despite moving ahead with an IPO, AIA may still attract a strategic buyer or investor before its listing.Large IPOs often have a cornerstone investor company or an investment group that purchases a stake before the offering. The list of companies that showed interest in AIA during its auction included Canada's Manulife Financial Corp., Singapore state investor Temasek and U.K. insurer Prudential P.L.C.