(Bloomberg) – American International Group Inc., the insurer selling units to repay a government loan, may pull its U.S. auto unit from the market after Zurich Financial Services AG withdrew an offer, two people familiar with the matter said.

The auction of 21st Century Insurance, which AIG expected to generate about $2 billion, stalled after the companies couldn’t agree on a price, said one person, who declined to be named because the negotiations were private.
AIG’s inability to draw adequate bids for businesses amid the global economic crisis casts further doubt on Chief Executive Officer Edward Liddy’s plan to repay the government by selling assets. The company has disclosed about $2.4 billion in sales, including an equipment insurer and a private bank, since unveiling the strategy in October.

Joseph Norton, a spokesman at New York-based AIG, and Sean Kevelighan of Zurich, based in the city of the same name, declined to comment.

21st Century, based in Woodland Hills, California, sells auto policies over the telephone and Internet, avoiding the expense of using agents. AIG first took a stake in 21st Century in 1994 and acquired majority ownership in 1998. It bought the remaining portion in 2007 for $22 a share, valuing the entire company at $1.9 billion.

After consolidating its ownership, AIG changed the name of the unit to aigdirect.com, only to switch it back to 21st Century following the government rescue. AIG took an $85 billion government bailout last year, a package that expanded to about $150 billion in November. The rescue may be restructured again next week because of the insurer’s difficulty selling units, according to people familiar with the matter.