AIG Confirms Scope For Sale Of Taiwan Based Nan Shan Life Co

Posted on Jan 05, 2011 by Sergio Ulloa (G+)

The major United States insurer American International Group (AIG) has informed US regulators - the Securities and Exchange Commission - that the company has received offers for its Taiwan based insurance unit - the Nan Shan Life Insurance Company as part of its strategic restructuring. The prospective buyers of Nan Shan have approached AIG by providing the insurer with unsolicited letters of interest for the Taiwanese insurance venture. The offers range in value from US$2.15 billion to US$3 billion. AIG confirmed the preliminary offers in a letter to the Securities and Exchange Commission on the 12th November 2010, which was released by the US regulators in January 2011. The New York based insurer has been trying to offload Nan Shan since October 2009 in order to generate capital as part of its attempt to repay the US government for its US$182 billion bailout received in 2008, after the collapse of the financial industry worldwide. In the latter part of 2010, AIG invited interested parties to make an offer for Nan Shan, which has generated four possible proposals ranging from US$ 2.15 billion to US$3 billion. One of the bids from the Taiwan Secom Group - a home security company - is based on buying a stake in Nan Shan and for it then to be run as a joint venture with AIG as an alternative to the preferred outright sale of the life unit. AIG had a US$ 2.15 billion bid by a consortium led by Hong Kong based Primus Financial and China Strategic Holdings blocked by Taiwan's Financial Supervisory Commission in September 2010 on the grounds that it was not satisfied that the bidders were interested in providing a long-term commitment to the business and on its ability to fund the transaction. Previously the Taiwan regulator asked AIG if it would consider placing Nan Shan Life on the Taiwan Stock Exchange, but this was rejected by AIG in favor of an outright sale. Any potential buyer of Nan Shan has been told that it must meet five requirements set out by the Taiwan regulatory authority covering adequate financial resources, long term commitments, insurance experience, funding sources and protection of the existing Nan Shan employee and client base. Since the US government bailed out AIG, the US insurer has been seeking opportunities to off-load global operations and is set to sell its two Japanese insurance units - the AIG Star Life Insurance Co and AIG Edison Life Insurance Co to Prudential Financial Incorporation. AIG has already sold Alico to US rival's MetLife for US$15.5 billion in early 2010. After a failed bid by the UK insurer Prudential for AIG's lucrative Asian arm, AIA, the business was placed on the Hong Kong Stock Exchange in October 2010 in order to generate income to repay part of the bailout loan from the US government. Nan Shan Life is one of Taiwan's leading insurance companies and had assets totaling US$56.5 billion in November 2010. Major players in the Taiwanese insurance market include Cathay Financial Holdings and Fubon Financial Holdings, however, a number of foreign insurers have been exiting the Taiwan insurance industry in recent years due to market stagnation and low profitability. Global insurers such as MassMutual, Prudential, Aegon and ING have taken action to divest operations in Taiwan, although the French financial services provider BNP Paribas has recently entered into a bancassurance joint venture with the locally based Taiwan Cooperative Bank. AIG plans to continue with its restructuring focusing on building its core US domestic life insurance activities and global property / casualty cover. AIG reported a net loss of US$2.4 billion in the third quarter of 2010, which was primarily due to one-off restructuring costs. In August 2010, AIG and the US government entered into a transaction agreement based on the US insurer accelerating repayments of the US$182 billion bailout received in 2008. The US government's loan package for AIG, which was granted by the US Federal Reserve, is expected to be paid off in the near future, thus enabling the US tax payer to recover its 'investment' in AIG. Companies Mentioned AIG The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally. Nan Shan 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 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. Fubon Life Fubon Life was founded in 1993 and is based in Taipei, Taiwan. Fubon Life provides life insurance and health insurance services. Fubon Life Insurance Co. Ltd. was formerly known as Fubon Life Assurance Co., Ltd. and change its name to Fubon Life Insurance Co. Ltd. in June 2009. Fubon Life operates as a subsidiary of Fubon Financial Holding Co. Ltd. Prudential 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. MetLife 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. Ageas Ageas is an international insurance company with a heritage spanning more than 180 years. Ranked among the top 20 insurance companies in Europe, Ageas has chosen to concentrate its business activities in Europe and Asia, which together make up the largest share of the global insurance market. They are grouped around four segments: Belgium, United Kingdom, Continental Europe and Asia. It is an undisputed leader in the Belgian market for individual life and employee benefits, as well as a leading non-life player, through AG Insurance. Internationally Ageas has a strong presence in the UK, where it is the third largest player in private car insurance. The company also has subsidiaries in France, Germany, Turkey, Ukraine and Hong Kong. Ageas has a track record in developing partnerships with strong financial institutions and key distributors in different markets around the world and successfully operates partnerships in Luxembourg, Italy, Portugal, China, Malaysia, India and Thailand. ING ING provides banking, investments, life insurance and retirement services and operates in more than 50 countries. It serves more than 85 million private, corporate and institutional customers in Europe, North and Latin America, Asia and Australia.