HONG KONG (Bloomberg)—China Strategic Holdings Ltd. will consider appealing a decision by Taiwan regulators to reject its $2.15 billion bid for American International Group Inc.'s local unit, CEO Raymond Or said.

The Hong Kong-based company, seeking to acquire Nan Shan Life Insurance Co., will discuss whether to appeal with bidding partner Primus Financial Holdings Ltd. and AIG, Mr. Or said. Primus is also considering an appeal, two people with knowledge of the matter said.

The financial firm set up by Robert Morse, the former Citigroup Inc. Asia investment banking chief, wants to buy Nan Shan as other foreign insurers including Aegon N.V., Prudential P.L.C. and ING Groep N.V. have exited the market. AIG said Tuesday it will consider scaling back operations at the Taiwan unit.

“We are extremely disappointed,” Mr. Or told reporters at a briefing in Hong Kong Wednesday. “China Strategic will still focus on the Nan Shan acquisition in future, we won't easily give up.”

Primus can appeal to Taiwan's Cabinet within 30 days of receiving the official rejection, Vice Economics Minister Hwang Jung-chiou said Wednesday. Mr. Or said today his company hasn't received official notification of the rejection.

AIG CEO Robert Benmosche must sell assets and improve profits from property/casualty and retirement services to repay the firm's $182.3 billion U.S. rescue. Nan Shan posted a $259 million net loss in the second quarter, compared with $79 million in profit in the year-earlier period.

Concessions made

Primus and China Strategic have spent about a year seeking approval to buy Nan Shan and have made concessions, including a seven-year lockup of 70% of Nan Shan shares they planned to buy, one of the people with knowledge of the matter said. AIG had agreed in October to sell its almost 98% stake in Nan Shan to the group.

The group failed to convince the Financial Supervisory Commission it has the financial capability and long-term commitment to operate the business, Wu Tang-chieh, vice chairman of the regulator, said Tuesday at a briefing in Taipei.

To alleviate Taiwan's concerns about funding commitments, AIG agreed to carve out a $325 million escrow fund from the sale proceeds.

‘Capital doubts'

“I don't really understand why they said they have doubts about our ability to raise capital,” Mr. Or said Wednesday. “It may be that the Taiwan regulators' understanding of international capital markets is not thorough enough.”

China Strategic is raising $1.5 billion of equity to fund the purchase, one of the people said Wednesday. Other concessions include earmarking a NT$5 billion ($156 million) incentive payment for Nan Shan's staff and insurance agents upon completion of the transaction, the person said.

China Strategic's Hong Kong-traded shares will remain suspended until it receives the official notice from Taiwan's FSC and makes a decision about an appeal, Mr. Or said.

“After receiving the official notification, the company, Primus Financial and AIG will confer to determine the next steps going forward and decide whether to appeal this decision,” China Strategic said in a separate statement.

Aegon of the Netherlands sold its unprofitable Taiwanese life insurance unit to Zhongwei Co. Ltd. in April last year. Prudential transferred its Taiwanese sales force and 94% of its liabilities on the island last year to China Life Insurance Co.

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