Posted on Mar 07, 2011 by Sergio Ulloa
The protracted sale of the American International Group's (AIG's) Taiwanese life insurance arm - Nan Shan Life - is now set for review by Taiwan's financial regulator; this is expected to be completed within the first half of 2011.
The Financial Supervisory Commission (FSC) in Taiwan is evaluating the US$2.16 billion bid by the locally based Ruentex Group for AIG's Taiwan's life insurance operation; the bid was accepted by AIG earlier this year after the insurer invited interested parties to bid for Nan Shan Life.
The proposed sale is the second attempt by AIG in the last two years to offload Nan Shan Life after an initial US$2.15 billion bid by the Hong Kong-led consortium Primus Financial Holdings Ltd was blocked
. This bid was rejected by the Taiwanese regulatory authority on the grounds that the potential owner was not committed to the long term interest of the insurer and cited concerns about the financial capability of Primus.
The Taiwan FSC has requested that the Ruen Chen Investment Company - the group leading the bid to acquire Nan Shan Life - submit all necessary paperwork by the 24th March 2011 to enable the Taiwanese insurance authorities to make its initial assessment of the planned take-over.
AIG is still working towards generating capital to repay the US government for the US$182 billion
bailout loan received at the height of the global financial crisis in 2008; this saved the international insurance giant from financial collapse.
Since receiving the bailout loan from the US tax payer, AIG has sold off some core insurance brands, including Alico - to rival insurers Metlife - for US$16.2 billion and its Japanese ventures AIG Edison Life and AIG Star Life to Prudential Financial for approximately US$4.8 billion
Along with the divestment of the international insurance brands, AIG's flagship Asian arm - American International Assurance (AIA) - was floated on the Hong Kong Stock Exchange in October 2010 generating US$ 17.9 billion; this followed the major British insurer - Prudential - dropping a US$35.5 billion bid for AIA after a revolt by Prudential's shareholders.
AIG announced net income for the fourth quarter of 2010 of US$11.2 billion
. This was helped by the substantial cash generated from the selling off of core brands. Total yearly earnings for the group amounted to US$7.8 billion in 2010 - a major improvement on the loss of US$10.9 billion reported in 2009.
Previously the Taiwan FSC has stated that any potential buyer of Nan Shan must demonstrate adequate financial resources, necessary experience and commitment to criteria set out by the regulators to ensure all parties involved in the transactions will benefit from the long term success of the Taiwanese life insurer. The FSC's concern is to safeguard the insurance industry in Taiwan, with guarantees on commitments to the needs of Nan Shan's policyholders and staff.
If the Nan Shan deal is completed within the first half of this year, it will mean AIG remains well placed to achieve its strategic restructuring programme goals, enabling it to become a leaner and more efficient global insurer.
The Ruentex Group successful acquisition of Nan Shan will add to the Taiwanese conglomerates network, which currently includes interests in finances, distribution and textiles.
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.
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.
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.
Prudential Financial Inc
Prudential Financial Inc. is a financial services leader, with approximately US$750 billion of assets under management as at September 2010. Prudential Financial operates in the United States, Europe, Latin American and Asia, with approximately 42,000 employees worldwide