By Yantoultra Ngui and Kane Wu

SINGAPORE/HONG KONG, Oct 18 (Reuters) - Japanese insurer Tokio Marine has paused the sale of its $1 billion Southeast Asia life insurance business, partly due to a dispute with a Malaysian partner over an expiring products distribution agreement, four sources with knowledge of the matter said.

The Tokyo-listed company hired Goldman Sachs and Jefferies last year to work on the sale that include Tokio Marine's life insurance businesses in Indonesia, Malaysia, Singapore and Thailand, Reuters reported in June 2023.

The sale has attracted interest from Japanese and Middle Eastern buyers, said the first source.

However, Tokio Marine last month filed a lawsuit against RHB

in Malaysia, seeking to enforce its right of first refusal over a 10-year product distribution agreement that is due to expire by year-end, a filing by RHB at that time showed.

Tokio Marine also asked RHB for details of the final bid that RHB has agreed to accept from other parties for a new deal, and applied for an interim injunction to prevent RHB from finalising an agreement with other parties, the filing showed.

Given the pending dispute, buyers were unable to make offers that would meet Tokio Marine's valuation expectations, said the first and second sources.

Some buyers had separately offered to buy only part of Tokio Marine's Southeast Asia life insurance business, but the insurer insisted on selling it as a whole, those two sources said.

All sources declined to be named as the matter was private.

In a response to Reuters' query, Tokio Marine confirmed it was suing a Malaysian bank, but declined to give details or comment on any impact on the sale of its Southeast Asia life insurance business.

Goldman Sachs and Jefferies declined to comment. RHB did not immediately respond to a request for comment.

The paused sale comes as Tokio Marine has been reviewing its businesses to boost profitability.

The Tokyo-headquartered company divested its Tokio Marine Highland's U.S. construction division to Intact Insurance Group in August 2022, according to announcement at that time.

Founded in 1879, Tokio Marine was Japan's first non-life insurance company and it has since expanded into life insurance and now has a presence in 46 countries besides Japan, according to its website.

International businesses contribute 75% of its profits and Japan 25%, its website shows.

Shares of Tokio Marine have surged 61.1% year-to-date, giving it a market value of $75.1 billion as of Friday, LSEG data showed.

($1 = 149.8800 yen)

(Reporting Yantoultra Ngui in Singapore and Kane Wu in Hong Kong; Additional reporting by Anton Bridge in Tokyo; Editing by Mark Potter)

((Yantoultra.Ngui@thomsonreuters.com;))