NEW YORK (CNNMoney.com) -- Shares of troubled insurance giant AIG surged more than 6% Tuesday morning after reports said the company's board plans to meet this week to discuss a public offering or sale of its Asian life insurance business.
An initial public offering is the most likely option for the company's Asian insurance unit AIA, sources told Reuters, after AIG rejected an earlier bid for the division in June.
Board members will meet in New York on Wednesday to discuss what to do with AIA, the report said. AIG would not confirm or deny the report.
AIG (AIG, Fortune 500) has been selling off divisions of its company to pay back the $102 billion it owes U.S. taxpayers, after the struggling insurer took a series of bailouts from the government following the financial crisis.
As one of its biggest divisions, AIA is considered one of the company's crown jewels and its sale could cut AIG's debt by about a quarter.
But AIG rejected a bid for AIA from British insurer Prudential (PUK) in June, after Prudential tried to renegotiate its offer down to $30 billion from the original $35.5 billion price tag the companies agreed on.
An IPO is not likely to raise more than the $30 billion Prudential offered, but it's the next best option given the pressure AIG's board is under to pay back taxpayers for its bailout, said David Merkel, head of Aleph Investments. Merkel used to work for AIG.
"AIG left themselves in the situation where they could no longer control their destiny, and now they're reaping the fruits of it," he said.
Reports of other bids from the company have also surfaced, including a report in the South China Morning Post Tuesday that said four Chinese groups approached AIG and the Treasury Department to put in a bid for AIA.
AIG and the Treasury Department would not comment on that report.
On Monday evening, the largest private holder of AIG's common stock announced in an official filing that it had increased its stake in the company.
The Fairholme Fund, run by Bruce Berkowitz, recently bought an additional 7.3 million shares in AIG, according to the Securities and Exchange Commission filing. The fund now owns 32.8 million shares of AIG and is the second largest stakeholder, after the U.S. government.
What we commonly call the Web is really just the surface. Beneath that is a vast, mostly uncharted ocean called the Deep Web. More
Sanjiv Patel has invested over $1 million in his peanut company under a program that grants green cards to investors, but he may get kicked out of the country if he doesn't hire eight more people. More
The California city of Vallejo emerged from bankruptcy just over two years ago, but it is still struggling to pay its bills. More