American International Group Inc, the world's largest insurer, has hired Olin Wethington, the US Treasury Department's former special envoy in China, to oversee its expansion in China.

Wethington, 57, was named chairman of AIG in China and will report to senior vice-chairman Edmund Tse, the New York-based company said yesterday. Wethington resigned from the Treasury in September for a job outside of government.

International insurers are vying to expand in the nation of 1.3 billion people. Economic growth and lower government welfare benefits has boosted spending on protection and investment products. AIG, founded in Shanghai in 1919, returned to China in 1992, becoming the first foreign life insurer in the country.

"They have had more success than other foreign insurers, because of their history," said Donald Light, an analyst with Celent LLC, a Boston-based financial consulting firm. "To win in that market depends on being able to win the regulator game. A high-level government official is going to help."

Shares of AIG rose 48 cents to US$66.49 in New York Stock Exchange composite trading. The stock has gained 1 per cent in the past year, compared with a 12 per cent gain in the KBW Insurance Index.

During Wethington's tenure as envoy, China dropped a decade- long peg of its currency to the US dollar. "Olin's many accomplishments include negotiating on behalf of the US Government a number of financial market agreements with other countries," AIG chief executive Martin Sullivan said. "China is a very important market for AIG."

AIG returned to China under an agreement negotiated by former CEO Maurice "Hank" Greenberg. AIG has to work on developing its relationships there, he said in an earlier interview.

Growth in AIG's domestic life insurance business has lagged behind the growth rate overseas. In the first nine months of 2005, its earnings from foreign sales of life insurance and retirement products rose 28 per cent to US$4.08 billion compared with the same period a year earlier. Profit from US life insurance businesses increased 4.7 per cent to US$2.62 billion. The company does not give out overseas results by country.

Editor: Yan