American International Group Inc. is seeking as much as $507 million through the sale of part of its holding in PICC Property & Casualty Co., China’s biggest non-life insurer.

AIG, the largest commercial insurer in the U.S., is offering about 254 million shares of PICC at HK$15 ($1.93) to HK$15.48 apiece, according to terms obtained by Bloomberg. The price range represents a 2 percent to 5.1 percent discount to PICC’s closing price of HK$15.80 in Hong Kong on Monday.

Foreign investors have been selling holdings in Chinese insurers as their shares surged on rising investment returns. Singapore’s state investment company, Temasek Holdings Pte, cut its stake in Ping An Insurance Group Co. in December.

AIG, which has shrunk by half since its U.S. bailout in 2008 through asset sales, is seeking to generate funds to buy back more than $1 billion of its bonds and continue repurchasing stock.

Last month, Chief Executive Officer Peter Hancock said the insurer wouldn’t be rushed into selling international holdings such as its stake in plane-lessor AerCap Holdings NV. AIG raised a total of about $35 billion when it finished exiting Hong Kong-based AIA Group Ltd. in 2012.

PICC shares have surged 55 percent in the past year, outpacing the 12 percent gain in the benchmark Hang Seng Index. AIG held about 1.47 billion shares of PICC before the sale, or 31.9 percent of the company, according to data compiled by Bloomberg.

Goldman Sachs Group Inc. is among banks arranging the sale, the terms show.

–With assistance from Doni Bloomfield and Sonali Basak in New York.