Insurance giant American International Group (NYSE:AIG) has reached a nonbinding agreement with Chinese insurer PICC Group to establish a joint venture in that country, AIG announced this week. The venture, which would involve AIG and its counterpart's PICC Life unit, would sell life insurance and other insurance products throughout the country, focusing its efforts on the nation's major cities.

The American company has also committed to invest around $500 million in PICC Group's upcoming IPO in Hong Kong, pledging that it will subsequently sell no more than 25% of its stake without permission from PICC for a period of five years. However, it can sell all its shares without PICC's consent if the joint venture does not move forward. AIG currently has a nearly 10% stake in the Hong Kong-listed PICC Property and Casualty Company, a subsidiary of PICC Group.

The agreement brings AIG closer to its roots, in a way -- the company's predecessor, American Asiatic Underwriters, was founded in Shanghai in 1919.

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