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Non-life insurance mergers on the horizon

The industry in Taiwan consisting of: 39 Non-life insurers * 16 domestic firms * 10 foreign insurers * 13 foreign liaison offices

After several domestic life insurance companies began changing hands last year, the non-life insurance sector looks to be the next insurance sector subject to mergers and acquisition.

A number of non-life insurance companies have expressed interest in merger and acquisition activities with non-life insurers.

Fubon Insurance (´I¨12£ª««OÀI) has been interested in taking over other non-life insurers; Mingtai Fire & Marine Insurance (©ú¥x2£ª««OÁy) intends to sell part its shares to foreign non-life insurers; AXA Assurance IARD (|w2±2£ª««OÀI) and Mitsui Marine and Fire Insurance (?T?«®ü?W?õ¨a2£ª««OÀI) and several other foreign non-life insurers are also looking for domestic partners.

Analysts said the merger activities in the market would be closely related to the timing of Taiwan's WTO entry.

"Fubon Insurance has been evaluating the possibilities of merging with other non-life insurers since last year," said Shih Tsan-ming (¥ÛÀé©ú), general manager of the company. "We will choose domestic insurers that complement Fubon as merger candidates."

Fubon Insurance has been the largest non-life insurer in Taiwan for years. Non-life insurers, including Taiwan Fire & Marine Insurance (»OÆW2£ª««OÀI) and South China Insurance (µØ«n2£ª««OÀI) have reported to have been approached by Fubon Insurance, but the companies deny it.

Both companies are much smaller than Fubon in terms of market share.

Mingtai Fire & Marine Insurance (©ú¥x2£ª««OÁy) is currently the second largest non-life insurer in Taiwan, with more than 10 percent of the market share.

Although the company is not listed, it has been one of the major targets of foreign insurance groups looking to acquire stakes in local firms.

Executive of Mingtai Fire & Marine Insurance said several foreign insurance groups, including Munich Re (¼}¥§¶Â|A«OÀI), AXA Assurance IARD and Mitsui Marine and Fire Insurance, have been interested in acquiring more than 50 percent shares of the company.

Since it will cause the major shareholders of Mingtai to lose their controlling interest, the executives said the shareholders are still evaluating the situation.

Executives of Fubon Insurance say it is still too early to discuss mergers now, but the company has every intention of doing so. And since the idea is still at an early stage of evaluation, candidates remain uncertain.

Executives of Mingtai Fire & Marine Insurance say its major shareholders wish to continue to hold the company's controlling interest. But it still welcomes foreign insurance groups as minor shareholders, since it could help the company enlarge its capacity to underwrite insurance policies.

Also, after the UK's Prudential Assurance (-^°ê«O¸Û«OÀI) took over Chinfon Life Insurance (¼yÂ*?H1Ø) two months ago, it is said that the company has also become interested in Taiwan's non-life insurers.

After Allianz Insurance Group (¼w°ê|wÁp«OÀI) acquired 50 percent of Eagle Star President General Insurance (2Î?@2£ª««OÀI) and Eagle Star President Life Insurance (2Î?@?H1Ø«OÀI) earlier last year, executives of the company said it would not give up the opportunities to cooperate with other domestic insurance companies.

Industry analysts said while Taiwan is on the verge of entering the WTO, foreign insurance groups will certainly try to take over domestic insurers as stepping stones to exploring market opportunities in Taiwan.

Large insurers like Fubon Insurance will also try to take over their smaller peers to protect market share. Currently there are as many as 39 non-life insurers operating in Taiwan, including 16 domestic and 10 foreign insurance companies, and with another 13 foreign insurance liaison offices.

A consolidation in this over-crowded market is inevitable, giving the strong interest of dozens of foreign insurance groups in the local market after Taiwan's entry into the WTO.
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