Prudential, whose chief executive Tidjane Thiam is said to be in New York talks with the US insurer's board this weekend, declined to comment but is likely to confirm the discussions formally early today.
The Pru has also been approached over a potential sale of its UK life business by Clive Cowdery's Resolution investment vehicle, which bought Friends Provident last year, according to the Sunday Telegraph.
An acquisition of AIG's Asian arm, AIA, would transform the Pru into an insurance powerhouse across the region.
The UK insurer already has 11 million customers in Asia. In 2008, the region accounted for 57 per cent of its 1.31bn new business profits.
A sale of the AIA unit may help the US insurer pay back some of the huge support it has been given by the US taxpayer as a result of the financial crisis.
AIG – which is best known in this country as the sponsor of Premier League champions Manchester United – had to be saved from collapse by the US government in September 2008.
The company has been bailed out with around 120bn from US taxpayers after racking up huge losses on toxic derivative deals and Washington decided the business was too important to the country's economy to be allowed to fail.
A year ago AIG posted the biggest quarterly loss in US corporate history – $61.7bn (43.87bn) for the fourth quarter of 2008.
Results for the final three months of 2009 published on Friday showed a smaller net loss of $8.9bn (5.8bn). The firm said it was "engaged in productive discussions with third parties" about "a number" of possible deals.
Resolution declined to comment on the potential acquisition of the UK business.