Prudential in talks to cut the price for AIG's Asian division

The UK's biggest insurer is thought to be trying to cut the price it must pay for AIA to less than 30 billion US dollars , compared with the current price tag of 35 billion US dollars.

Shareholders have threatened to vote down the takeover on cost grounds, particularly in light of recent falls for Asian stock markets. It needs the support of 75 per cent of investors at a special meeting on June 7.

The Pru said discussions were taking place with AIG about the "current status" of the transaction but declined to give further details.

"These discussions may or may not lead to change in the terms of the combination of AIA Group and Prudential," it added.

The US government owns 80 per cent of AIG and is thought to be determined to get the failed insurance giant off its books. It was reported yesterday that the renegotiations followed a "strong suggestion" from the office of Tim Geithner, the US Treasury secretary.

The takeover would give Pru around 30 million customers in Asia and see the Asian operation become by far the group's biggest division – contributing around 60 per cent of new business profit.

The insurer has suffered a series of setbacks since it unveiled plans to buy the business from the American insurer in March.

It was forced to delay a 14bn investor cash-call being used to finance the takeover after the Financial Services Authority raised concerns about the capital strength of the enlarged company.

The rights issue was eventually launched in mid-May, but the hiccup with the FSA compounded worries over the acquisition.