Source: The Canadian Press

Manulife Financial Corp. (TSX:MFC) is back in the hunt for AIG’s (NYSE:AIG) major Asian life insurance unit, the Canadian company’s chief executive officer has told the Toronto Globe and Mail.

The insurer is interested in being “a potential suitor” for American International Assurance Ltd., Don Guloien said in an interview with the newspaper Wednesday, after AIA’s US$35.5-billion deal to be taken over by Prudential PLC fell apart.

“I think Manulife has more respect than virtually any other insurance company for being able to execute a deal like that, so we have a huge amount of interest from investors in seeing us pursue a deal like that,” Guloien said.

“I think people can be comfortable, though, that we would not be approaching that deal at any price approaching $35.5 billion.”

The Prudential-AIA deal would have been the largest the insurance sector had ever seen, but negative reaction to it from British regulators and Prudential’s shareholders caused the U.K. insurer to try to renegotiate the deal. But the two sides could not agree on new terms and Prudential abandoned the bid.

AIG wants to sell the Asian company in order to pay back part of its bailout from the U.S. government. But other insurers are balking at the price that Prudential offered.

Asia has long been a priority for Manulife, which operates in 11 countries and territories in the region and now derives nearly one-third of its profits from those operations. And the region’s significance to the company is increasing.

In October, Manulife’s board of directors will hold a meeting in China for the first time. Its directors hope to explore potential growth opportunities in the country, and to meet with officials from its local business partners, Sinochem and TEDA. Manulife also wants to commemorate the 40th anniversary of Canada’s diplomatic recognition of China.

For the time being, Manulife continues to pursue its Asian growth strategy, one that Guloien believes will pay off with or without a major acquisition.

“This aborted deal (by Prudential) has unfortunately set some price expectations that will stick in people’s minds for a period of time,” he said.

AIG accepted offers for AIA, including one from Manulife (which was then headed by former CEO Dominic D’Alessandro) in early 2009, sources said at the time. But the bidders themselves were contending with a severe decline in stock markets and headaches of their own, and the prices that they offered were unacceptable to AIG.

AIG went on to begin planning a public offering for AIA, until Prudential’s offer came through in March of this year. The disintegration of that deal has left Prudential’s executives on the hot seat, with shareholders angry about hundreds of millions of dollars the insurer will have to pay to back away from its bid.