Taiwan Today

The American Insurance Group announced Oct. 13 that it has agreed to sell its subsidiary company Nan Shan Life Insurance Co. Ltd. to Hong-Kong based Primus Financial Holdings Ltd. Primus will acquire a 97.57 percent stake in Nan Shan at a cost of US$2.15 billion, AIG said. The transaction if completed will represent the highest amount that has ever been paid for an insurance company, not only in Taiwan but in all of Asia as well. AIG has been severely affected by the global financial crisis and as a result now owes the United States government more than US$100 billion in loans. To improve its cash flow, AIG has been forced to sell Nan Shan, which has been a very profitable subsidiary for AIG. Founded in 1963, Nan Shan is the largest life insurer in Taiwan by total book value, with total assets exceeding NT$1.6 trillion (US$49 billion) and 7.9 million in-force policies held by approximately 4 million policyholders. The rights of current Nan Shan policyholders will not be affected at all by the transaction, said Primus Chairman Robert Morse. Morse also promised that Primus would look after current employees of Nan Shan. Nan Shan’s present management team, agents and employees will all be able to keep their present positions. The name Nan Shan will be retained, the company’s traditional sales system will be kept intact, and existing compensation and benefits will stay in place for at least two years, Morse said. When asked if Primus is supported by mainland Chinese funds, Morse stressed that “not a single dime of the company’s assets comes from mainland China.” The company’s major stake holders consist only of legal persons and tycoons from Hong Kong and other parts of the world, backed by HK-based China Strategic Holdings Ltd., he added. Lee Jih-chu, deputy minister of the Cabinet-level Financial Supervisory Commission, said the Ministry of Economic Affairs will entrust its Investment Commission to review the capital background of Primus Financial and the FSC to examine its business capabilities. Lee indicated that the review may not be finished by the end of the year, as the process is expected to be slow and careful. In its invitations for bids for Nan Shan, AIG emphasized in writing that Chinese-funded companies are not allowed to acquire a stake in the company. According to the Mainland Affairs Council, a company is considered “Chinese-funded” if “directly or indirectly more than 30 percent of the company is owned by mainland Chinese sources; or if the company’s shares are controlled by mainland Chinese sources.” Primus was established only in April, some say with the express purpose of taking over Nan Shan. Ng Wing-fai, the company’s managing director, said that Primus intends to acquire other insurance companies serving a Chinese-customer base in such areas as Hong Kong and Singapore. (TYH-HZW )