Sep
2
Taiwanese Regulators Reject Sale of AIG Unit to Primus
Filed Under AIG, China, Hong Kong, Life Insurance | 2 Comments
The Financial Supervisory Commission (FSC) of Taiwan has recently announced it has rejected the planned purchase of the life insurance unit of AIG in Taiwan by Primus Financial Holdings Ltd. It is believed the FSC had concerns about Primus, which is based in the Cayman Islands, may be backed by funds from mainland China, thus in violation of the Taiwan law that prohibits Chinese investment in the financial sector.
Primus has reiterated it does not have a Chinese sponsor.
Back in October 2009 American International Group Inc. (AIG) had announced the US$2.15 billion (EUR 1.7 billion) sale of Nan Shan Life Insurance Co. to a group of investors led by Hong Kong-based Primus Financial Holdings. Also part of the investors group led by Primus is China Strategic Holdings Ltd., also based in Hong Kong.
An official with the Investment Commission of Taiwan explained that the rejection of the sale was in part due to Primus having recently named several new shareholders during the past few months and that was perceived by the SFC as a lack of stability in their operations.
Upon gaining approval of the sale, China Strategic Holdings had a deal to sell to Chinatrust a 30 percent stake in Nan Shan for US$660 million (EUR 516 million). Chinatrust Financial Holding Co., is the third-largest financial company in Taiwan. Towards the end of June 2010, there was an announcement that China Trust intended to walk away from the Nan Shan deal { http://www.globalsurance.com/blog/chinatrust-walks-away-from-nan-shan-deal-with-aig-128320.html }, and now China Strategic is considering to launch an appeal against the decision of the FSC.
On a positive note, China Strategic has been cleared by the FSC of the Chinese funding rumours.
An appeal can be made to the Taiwanese Cabinet within 30 days of having received the official rejection notice. Neither Primus nor China Strategic have insofar received such official notification.
Companies mentioned:
The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally.
Nan Shan Life Insurance Company, Ltd. was established in July 1963. After its restructuring in January 1970, Mr. K.K. Tse, the then Chairman of American International Underwriters, became the first Chairman of the company. In forty years, Nan Shan has become a super insurance company with the most professional management, the best operational performance, and a solid financial foundation. Its agency force has been recognized as the best in Taiwan’s life insurance industry.
Primus is an Asia-based private equity fund focused on acquiring financial services companies. Members of the Primus Group include PFH Partnership Holdings and PMN Capital. Primus is a strategic operator in financial services with significant permanent capital, deep operational experience, and long-term financial capabilities.
Aug
30
MetLife Gets Approval for ALICO, DelAm Takeover
Filed Under AIG, Insurance Company, Life Insurance, MetLife | 3 Comments
The European Commission has given its approval for MetLife’s purchase of AIG subsidiaries American Life Insurance Company (ALICO) and Delaware American Life Insurance Company (DelAm), as part of MetLife’s takeover of AIG’s international life insurance business.
MetLife’s purchase of ALICO and associated subsidiaries was agreed upon early in 2010, and the company recently obtained approval to purchase ALICO’s Hungary-based subsidiary, AHICO, from Hungary’s financial markets regulator, PSzÁF, in the beginning of August, 2010.
The European Commission was looking at whether or not MetLife’s takeover of the two companies, ALICO and DelAm, would negatively impact competition in European markets. DelAm is part of AIG’s international life insurance operations. The purchase of DelAm, which provides wealth management services, retirement planning, life insurance and health insurance to individuals as well as commercial and institutional clients was considered not to pose any concerns, especially considering it does not provide services in the EU.
ALICO, which provides life insurance, retirement planning, wealth management, accident insurance and health insurance to individual customers and corporate clients, was found to have some overlap in activities with MetLife by the commission. MetLife and ALICO did overlap in some life insurance products in a few EU Member markets, however the combined market share of MetLife and ALICO in these markets would still be relatively small and the combined company would still face strong competition from other credible companies in the marketplace.
After MetLife’s acquisition of ALICO, it is expected that MetLife will be in a top-five position in many emerging markets, including those in central and eastern Europe, Latin America and the Middle East. MetLife is hoping to wrap up the deal with AIG by the end of 2010.
Insurance Companies Mentioned:
AIG
American International Group, Inc. (AIG), a world leader in insurance and financial services, is the leading international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG’s common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Paris and Tokyo.
ALICO
The American Life Insurance Company, generally known as Alico, provides a broad and innovative range of insurance and savings products to individual customers, corporate clients and high net worth customers. With a wide range of products to support every aspect of their customers’ lives, and provide comprehensive cover for the employees and commercial needs of their business clients. Their products include; health insurance, life insurance, savings plans, accident insurance, retirement planning and travel insurance among others.
DelAm
Delaware American Life Insurance Company, or DelAm, participates in the accident, life and health insurance business, writing accidental death and dismemberment, group life, long term disability, dental, and medical business as part of AIG’s international life insurance sales operations. It was incorporated in 1964 and is based in Houston, Texas; it is a subsidiary of AIG.
MetLife Inc.
Possessing over 140 years of insurance expertise, MetLife aims to be an innovator in the field of international Life insurance. Globally, MetLife is able to offer its clients accident and health insurance, life insurance, disability income protection, and retirement and savings products.
Jul
19
AIA Names New Chief Executive
Filed Under AIG, Hong Kong, Insurance Company, Life Insurance | 5 Comments
AIG has named former Prudential Chief Executive Mark Tucker as the head of AIA, the company’s Asian life insurance business. The move sees the replacement of existing CEO Mark Wilson, who was instrumental in stabilizing the company when AIG was on the brink of collapse.
While no comment was available from AIA with regards to the replacement of Wilson, reports from individuals familiar with the internal situation of the company say that Wilson had threatened to resign his post if the Prudential deal had gone forward. Despite the failure of the Prudential acquisition, Wilson’s position placed him in a contrary position to that of AIA’s upper management and may be a key reason for his replacement.
The ousting of Wilson comes less than a week after AIG Chairman, Harvey Golub, resigned the company following a disagreement with AIG’s CEO, Robert Benmosche.
Analysts are speculating that the nomination of Mark Tucker as the head of AIA is the latest incident of Benmosche asserting his control over the AIG group of companies. Reports of heightened Boardroom friction following the collapse of the US$ 35.5 billion deal with Prudential have been rife, leading to concern about the company ahead of an estimated US$15 billion AIA IPO, scheduled for later this year.
Benmosche is optimistic about the nomination of the new AIA Chief Executive, stating; “Mark Tucker has the public company experience, track record, relationships … that will help us accomplish our ambitious goals of not just taking a company of AIA’s size and scope public, but building on this great platform for the long term to create Asia’s pre-eminent, publicly traded insurance company.”
Mr Tucker is 53 years old. A certified chartered accountant, he initially joined Prudential in 1986 as part of Prudential Portfolio Managers Limited. Becoming Chief Executive for Prudential Corporation Asia in 1993, Mr Tucker held the post for a decade, during which time he evaluated the acquisition of AIA by Prudential. However, that deal ultimately fell through without the backing of AIG. Mr Tucker left the prudential group for HBOS Plc in 2004, where he took a position as the company’s finance director. However, that position was short lived as he returned to Prudential in 2005 as CEO. Mr Tucker left Prudential in 2009 when he resigned from the company.
Jul
16
AIA IPO Plans Moving Forward
Filed Under AIG, Hong Kong | 2 Comments
According to recent reports citing an unidentified source, American International Group Inc. (AIG) plans to go ahead with an Initial Public Offering (IPO) of its AIA Group life-insurance unit, later on this year.
After the collapse of the deal by which Prudential would have acquired AIA from AIG, there were expressions of interest for AIA by Generali, whilst at the same time AIG was considering the possibility of reviving its original plans for the AIA IPO.
During the latest AIG board meeting earlier this week, directors discussed the steps necessary to prepare for a listing of AIA in the Hong Kong stock market. At present, the US government holds a majority stake in AIG.
Depending upon the valuation of AIA, a sale of about half of the company could raise between US$15 billion (EUR 11.8 billion) and US$20 billion (EUR 15.8 billion). The proceeds of the AIA IPO would go towards repaying part of the many billions of US dollars owed to the US government.
Taking into account the time that would be required to prepare the AIA listing prospectus for a planned launch by year-end, it should be completed by the end of September.
Insurance Companies mentioned:
The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally.
AIA is a Hong Kong-based life insurance company doing business across Asia that has been in business since 1919. They service over 20 million policies through 23,000 employees and 300,000 agents throughout markets in Asia, including; Vietnam, Thailand, Taiwan, South Korea, Singapore, Philippines, New Zealand, Malaysia, Macau, Indonesia, India, Hong Kong, Mainland China, Brunei and Australia.
Jun
29
Chinatrust Walks Away from Nan Shan Deal with AIG
Filed Under AIG, China | 4 Comments
Chinatrust Financial Holding Co. Ltd. of Taiwan has effectively walked away from a deal with a Hong Kong-based consortium, formed by China Strategic Holdings Ltd. and Primus Financial Holdings, to purchase a 30 percent stake in Nan Shan Life Insurance Co. Ltd. a unit of American International Group Inc. (AIG), by letting the deadline of the deal lapse.
The deadline stipulated in the memorandum of understanding signed between Chinatrust and China Strategic expired last week.
Chinatrust has made the decision in spite of a pending decision by the Taiwanese regulators, the extension of the deadline to 12 October reached between China Strategic and AIG, and having previously agreed to set-up a escrow fund in trying to increase the approval likelihood of the deal.
Taiwan-based Chinatrust is a financial holding company with businesses in banking, securities, credit cards, insurance brokerage and asset management, and had previously lost a bid to acquire Nan Shan.
In an agreement made back in November 2009, China Strategic would sell to Chinatrust a 30 percent stake in Nan Shan for US$660 million (EUR 538 million). As part of this agreement, Chinatrust would allow China Strategic obtain 9.95 percent stake in the company through a subscription of 1.17 billion shares of their common stock at US$0.55 (EUR 0.45) a share.
The Taiwan Ministry of Economic Affairs has not approved the deal yet and has declined to comment on the progress of the regulatory review.
Insurance Companies mentioned:
The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally.
Nan Shan Life Insurance Company, Ltd. was established in July 1963. After its restructuring in January 1970, Mr. K.K. Tse, the then Chairman of American International Underwriters, became the first Chairman of the company. In forty years, Nan Shan has become a super insurance company with the most professional management, the best operational performance, and a solid financial foundation. Its agency force has been recognized as the best in Taiwan’s life insurance industry.
Jun
15
Purchaser of Nan Shan Agrees to Escrow Funds Request by AIG
Filed Under AIG, China, Hong Kong, Insurance Company, Life Insurance | 7 Comments
The buyers of Nan Shan Life Insurance, the Taiwanese life insurance unit of AIG, have agreed to amend their purchase agreement to include a escrow funds clause, in order to strengthen the bid for regulatory approval of the transaction.
Under these amended terms, US$325 million (EUR 266.4 million) of the purchase price will be isolated for a 4-year period under escrow, as an additional measure to improve the capital ratio of Nan Shan. This effectively means that AIG will not receive the full purchase price of the deal until 2014.
According to regulations effective in Taiwan, insurers are required to have a risk-based capital ratio of at least 200 percent. The escrow funds would be used to boost the capital ratio of Nan Shan should the need arise during the 4-year special funds lock-up period.
The Taiwan Ministry of Economic Affairs is currently reviewing the sale of Nan Shan to the Hong Kong-based consortium comprising China Strategic and Primus Financial Holdings. There are various concerns related to the transaction which are currently under scrutiny, including the shareholding structure of the consortium, source of capital and future commitments to employees and policyholders to ensure that their interests are safeguarded.
Under the original deal reached last October, AIG had agreed with the said consortium to sell a 97.57 percent stake of Nan Shan for US$2.15 billion (EUR 1.76 billion).
Insurance Companies mentioned:
The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally.
Nan Shan Life Insurance Company, Ltd. was established in July 1963. After its restructuring in January 1970, Mr. K.K. Tse, the then Chairman of American International Underwriters, became the first Chairman of the company. In forty years, Nan Shan has become a super insurance company with the most professional management, the best operational performance, and a solid financial foundation. Its agency force has been recognized as the best in Taiwan’s life insurance industry.
Jun
4
AIA appealing to Generali
Filed Under AIG, China, Hong Kong, Insurance Company | Leave a Comment
The third largest insurer in Europe, Assicurazioni Generali SpA of Italy, has expressed interest in acquiring part of the Asian operations of American International Group (AIG), should the latter opt for selling units rather than pursuing an initial public offer for AIA Group Ltd, the current holding company in control of all Asian businesses.
At the end of 2008, Generali weighed a bid for the Chinese business of AIG, and is nowadays expanding in emerging markets, including both China and the Middle East as an strategy to neutralise the effects of the financial tsunami.
According to analysts, Generali would need to sell shares to be able to proceed with an acquisition of such magnitude. This would be subject to a decision by AIG on whether or not to breakup its units in Asia, as a possible move to repay part of the US$182 billion (EUR 149.2 billion) bailout AIG received from the US government.
All eyes continue to be focused on the next move taken by AIG in relation to AIA, after the failed bid by Prudential.
Insurance Companies mentioned:
The Generali Group is one of the most significant participants in the global insurance and financial products market. The Group is a leader in Italy and Assicurazioni Generali, founded in 1831 in Trieste, is the Group’s Parent and principal operating Company. Generali is one of the leading global players in the assistance sector thanks to the Europ Assistance Group, active in more than 200 countries with services in the motor, travel, healthcare, home and family sectors. In recent years, the Group has made a significant return to 14 central-eastern European markets and has set up offices in the principal markets of the Far East, including China and India.
The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally.
AIA is a Hong Kong-based life insurance company doing business across Asia that has been in business since 1919. They service over 20 million policies through 23,000 employees and 300,000 agents throughout markets in Asia, including; Vietnam, Thailand, Taiwan, South Korea, Singapore, Philippines, New Zealand, Malaysia, Macau, Indonesia, India, Hong Kong, Mainland China, Brunei and Australia.
Jun
2
Prudential No Longer Positive on AIA Sale
Filed Under AIG, Insurance Company, United Kingdom | 3 Comments
What could have resulted to be a game changer for the insurance industry in Asia appears now to be in the process of falling apart by bits, pieces and big chunks in the failed negotiations between Prudential and AIG to acquire AIA in a US$35.5 billion deal (EUR 29.1 billion).
Taxpayers in the US will have to wait a bit longer to get reimbursed by AIG, after the company decided not to lower its original asking price for AIA, whilst Prudential is now moving to negotiate with AIG on the termination of the deal.
Initially heralded as a deal that would give Prudential a firm foothold into the Asian insurance market, the deal started to experience unexpected regulatory challenges by the Financial Services Authority of the UK, then an orchestrated revolt by key shareholders and most recently, the failed bid to lower the asking price for AIA to US$30.4 billion (EUR 24.9 billion).
The original cash offer was US$25 billion (EUR 20.5 billion) and later reduced to US$23 billion (EUR 18.9 billion).
New plans need to be formulated for repaying the US$132 billion (EUR 108.2 billion) bailout AIG received from the US government, which brings the task back into the radar of pressing issues to resolve.
At the beginning of the AIA deal negotiations, Prudential and AIG had agreed on a GBP 152.6 million breakup fee, which at that time was worth US$231 million (EUR 189.3 million now). Prudential now estimates that the total cost for not going ahead with the deal will be closer to GBP 450 million (US$ 661.5 million).
Given the current situation with the economy in Europe, and the amount of money Prudential will pay for backing off, the deal is perceived by some market players as being a massive waste, which at the end may claim the head of the CEO, Tidjane Thiam, who has been on the job for less than one year.
Insurance Companies mentioned:
Prudential has been in the insurance and financial services business since 1848. Today they operate throughout the UK, US and Asia offering international health insurance and retirement planning services, supported by 27,000 employees worldwide.
The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally.
AIA is a Hong Kong-based life insurance company doing business across Asia that has been in business since 1919. They service over 20 million policies through 23,000 employees and 300,000 agents throughout markets in Asia, including; Vietnam, Thailand, Taiwan, South Korea, Singapore, Philippines, New Zealand, Malaysia, Macau, Indonesia, India, Hong Kong, Mainland China, Brunei and Australia.
May
18
Prudential readies Rights Issue aiming to Complete AIA Acquisition
Filed Under AIG, Hong Kong, Insurance Company, United Kingdom | 2 Comments
After having received the tacit approval of the Financial Services Authority in the UK, Prudential has now released details of the controversial US$21 billion (EUR 17 billion) rights issue offering 13.96 billion new shares to help funding the US$35.5 billion (EUR 28.8 billion) purchase of American International Assurance Group Ltd. (AIA) from American International Group (AIG).
With the deal going through, Prudential once again raises hopes that AIG would be able to pay the US Government a good trench of the US$182.3 billion (EUR 147.9 billion) bailout it received during the height of the financial tsunami. Prudential stands to gain access to an additional 20 million customers and 23,500 employees deployed in 15 countries, increasing dramatically the foothold of the insurer in Asia.
According to details contained in the prospectus, Prudential will pay AIG US$25 billion (EUR 20.3 billion) in cash, US$5.5 billion (EUR 4.46 billion) as an equity stake representing 10.9 percent of the combined entity, a US$3 billion (EUR 2.43 billion) mandatory convertible bond, US$2 billion (EUR 1.62 billion) in Tier 1 notes and any subordinated notes that AIG subscribes to, scraping the standby commitment from AIG to the subscription of hybrid capital to the tune of US$1.875 billion (EUR 1.52 billion), required in a previous announcement released at the beginning of March this year.
A minimum of 75 percent of shareholders need to approve the AIA deal and rights issue on the Extraordinary General Meeting scheduled by Prudential to occur on 07 June. Prudential plans to go ahead with the rights issue in London on 08 June, 09 June in Singapore and 10 June in Hong Kong.
Given the opposition expressed by key shareholders in previous occasions, it remains to be seen whether this most ambitious acquisition works out for all parties involved.
Insurance Companies mentioned:
Prudential has been in the insurance and financial services business since 1848. Today they operate throughout the UK, US and Asia offering international health insurance and retirement planning services, supported by 27,000 employees worldwide.
The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally.
AIA is a Hong Kong-based life insurance company doing business across Asia that has been in business since 1919. They service over 20 million policies through 23,000 employees and 300,000 agents throughout markets in Asia, including; Vietnam, Thailand, Taiwan, South Korea, Singapore, Philippines, New Zealand, Malaysia, Macau, Indonesia, India, Hong Kong, Mainland China, Brunei and Australia.
May
14
FSA approves Prudential deal with AIG to acquire AIA
Filed Under AIG, Hong Kong, Insurance Company, United Kingdom | 1 Comment
The Financial Services Authority (FSA) of the UK have given their approval in principle for Prudential to go ahead with the US$35.5 billion (EUR 28.3 billion) deal made with American International Group (AIG) to purchase American International Assurance (AIA), according to sources familiar with the latest situation on this most audacious deal since the financial tsunami started to be felt globally.
Prudential is now likely to move swiftly in pricing the planned massive rights issue within days.
The FSA had last week blocked the deal at the eleventh hour on concerns over the capital base of Prudential, creating a delay in the original schedule to buy AIA. The cash component of the deal has been lowered to US$23 billion (EUR 18.3 billion) from the originally agreed amount of US$25 billion (EUR 20 billion), retaining the overall price of the deal. It is now up to the Listing Authority of the UK to approve the US$21 billion (EUR 16.8 billion) rights issue, opening the potential for further delays.
AIG wishes for the best terms possible for the cash component as it would allow the insurer to repay taxpayers in the US the US$182.3 billion (EUR 145.4 billion) bailout it received from the US government.
Prudential has yet to secure approval of the takeover deal by at least 75 percent of investors, with shareholders increasing the pressure to offload the UK operations instead of going ahead with the rights issue.
All parties concerned wish for the best outcome and least delays possible and the stakes couldn’t be higher at the moment.
Insurance Companies mentioned:
Prudential has been in the insurance and financial services business since 1848. Today they operate throughout the UK, US and Asia offering international health insurance and retirement planning services, supported by 27,000 employees worldwide.
The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally.
Prudential P.L.C.
AIA is a Hong Kong-based life insurance company doing business across Asia that has been in business since 1919. They service over 20 million policies through 23,000 employees and 300,000 agents throughout markets in Asia, including; Vietnam, Thailand, Taiwan, South Korea, Singapore, Philippines, New Zealand, Malaysia, Macau, Indonesia, India, Hong Kong, Mainland China, Brunei and Australia.