TAIPEI - MORE than 1,200 people in Taiwan on Wednesday flooded a local subsidiary of troubled global insurance giant American International Group to end their policies or get cash loans from the firm.

The policyholders of Nan Shan Life Insurance, an AIG subsidiary, scrambled to a regional office in downtown Taipei following reports that the US Federal Reserve had agreed to an unprecedented 85-billion-dollar rescue loan for AIG.

By early evening, about half of them had completed applications with the insurer, but it was not clear how many had terminated their plans or had sought loans off of their policies as a way to get cash from the firm in the case it went bankrupt.

At the same time, hundreds more were seen waiting inside the office, and reporters were barred from entering the building.

'I hope I can get a loan of up to 1.5 million Taiwan dollars (S$67,325) using one of the five policies I and my family have,' a woman in her 50s told AFP declining to identify herself.

Displaying a slip showing she was the 1,205th person in the Nan Shan office to apply for the emergency move, she said she was aware of the US government's plan to rescue AIG, but 'still I?m afraid we may lose everything'.

Nan Shan has dozens of offices across Taiwan.

Another woman, housewife Liao Ying-ying from Taipei county, said she wanted to use one of her three policies to get a loan of 500,000 Taiwan dollars at an interest rate of 6.9 per cent per annum.

'I decided to come here after I read the newspaper this morning about the AIG woes,' Ms Liao said.

Meanwhile, Nan Shan called for calm, saying the 3.29 million policies would be fully guaranteed.

Taiwan's financial regulator, Financial Supervisory Commission, also said Nan Shan was financially healthy.