The proposed $2.2bn purchase of AIG's Taiwan insurance unit by a Hong Kong consortium is facing scrutiny amid regulatory concerns that include whether the buyers are backed by Chinese funds.

AIG agreed in October to sell Nan Shan, Taiwan's second-largest life insurer, to a consortium led by Primus Financial, a financial services fund, but the probe has delayed approval.

The largest member of the consortium is China Strategic, a Hong Kong-listed battery maker whose new business focus is financial services.

China Strategic's involvement has fuelled concerns in Taiwan that the consortium could be backed by Chinese funds. Taiwan has strict limits on permitted levels of investment from the mainland. Primus and China Strategic have denied having mainland backing and are confident they will secure approval.

While AIG is keen to secure a sale, the pressure to raise funds to repay its debts to the US government has receded with the proposed sale of its Asian life insurance assets to the UK's Prudential for $35.5bn and the sale of Alico to MetLife for $15.5bn.

China Strategic appeared to have passed one hurdle as Huang Chung-chiu, Taiwan's deputy economics minister, told legislators yesterday that a review of documents showed its backers were not mainland Chinese nationals, but carried British and Hong Kong passports.

However, Wu Chung-chuan, deputy director-general of the insurance bureau at the Financial Supervisory Commission, said his department still had “more than 40 unanswered questions” after reviewing China Strategic's initial application.

Mr Wu said concerns included whether China Strategic and Primus had the professional skills to run Nan Shan, or would be able to raise further funds to support the company.

Mr Wu said there was no deadline for the case review, but officials believed it could be decided within two months.