LONDON (Bloomberg) - HSBC Holdings plc., Europe's biggest bank, expects insurance sales in Asia to rise 18 percent this year as it sells more through banks and gains market share from competitors including American International Group Inc. (AIG)

Gross written premiums in the region will rise to "just north of" $4 billion this year compared with $3.4 billion in 2008, David Fried, HSBC's Asia-Pacific head of insurance, said in a telephone interview.

"When AIG first received governmental money there were queues outside their offices by the Singaporean consumer wanting their money," Mr. Fried said on June 16. "What we're seeing around the region is a flight to quality."

HSBC wants to raise the proportion of its earnings from insurance in the long term to about 20 percent as losses in the US crimp banking profits. Asia, where HSBC earns half its profit, is the bank's biggest market for insurance and last year accounted for almost a third of the company's insurance revenue.

HSBC plans to boost insurance sales through its joint venture with Canara Bank and Oriental Bank of Commerce in India by expanding the number of bank branches that distribute products. Revenue in 2010 will "double or even triple" the $75 million the company expects this year as it sells insurance through 600 more Indian branches, Mr. Fried said.

The bank is also close to a "major" distribution deal in Singapore and last week received regulatory approval to start a joint venture in China.

AIG, the insurer selling assets to repay a US government bailout, hired Deutsche Bank AG and Morgan Stanley to handle the initial public offering of an Asian life insurance unit, three people familiar with the matter said yesterday.

The unit, American International Assurance Co., has more than 20 million customers and more than $60 billion of assets.

AIG, founded in Shanghai in 1919, was first rescued in September with an $85 billion credit line after a liquidity squeeze caused by credit-default swaps the insurer sold to banks. The bailout expanded to $182.5 billion as the government sought to prevent losses at banks that did business with AIG.