American International Group Inc (AIG) yesterday announced that it plans to acquire a controlling stake in Taipei-based Central Insurance Co (
Currently, the Polaris Financial Group (
The purchase value of the transaction is estimated at between NT$5.92 billion (US$182.8 million) and NT$6.05 billion, AIG said in a press release. AIG Direct Marketing Co, operating under AIG's subsidiary AIU Insurance Co, will issue redeemable preferred shares in exchange for common shares of Central Insurance at a ration of 1.7 to 1, according to an agreement inked by AIG and Central Insurance.
The preferred shares will have a liquidation value of NT$10 per share.
The share swap is subject to approval by Central Insurance's shareholders as well as the national regulator, and is slated to take place in the third quarter of this year.
Central Insurance is scheduled to seek endorsement for the deal at a provisional shareholders' meeting on April 7.
After the transaction, the combined operations of Central Insurance and AIU Insurance's branch in Taiwan are expected to occupy the No. 3 spot in the domestic market in terms of direct gross premiums written, topping NT$10 billion a year.
Central Insurance, the nation's sixth-largest non-life insurer with a market share of 6 percent, has over 900 employees and received NT$7.7 billion in gross written premiums last year.
Both sides are bullish about the synergy to be created via the proposed deal.
"Central Insurance has 40 business units in Taiwan and two representative offices in China's Guangzhou and Shanghai. Our company operations will be improved and customers will get more complete service after integrating with the worldwide insurance resources of AIG," Central Insurance president Charles Sung (宋道平) said.
The deal is expected to help AIG strengthen its foothold in Asia and deepen its commitment to the greater China region, the company said.
AIG bought a controlling stake in Nan Shan Life Insurance Co (
Taiwan Ratings Corp (中華信評), a local arm of Standard & Poor's Ratings Services, yesterday announced a "twAA-" long-term counterparty credit rating for Central Insurance.
"Taiwan Ratings anticipates the deal will materialize in the near future and, if successfully leveraging the resources of its new parent, Central Insurance's credit profile is likely to be strengthened," the ratings agency said in a press release.
Since Polaris Financial Group became Central Insurance's largest shareholder in 2003, its gross premiums have jumped from NT$4 billion to NT$7.7 billion last year with the number of insurance policies surging from 500,000 to 1.25 million.
Under the leadership of chairman Fred Pai (白文仁), who took the helm in 2003, Central Insurance has offered creative insurance products, such as independent pet insurance policies, "ghost month" insurance and celebrity insurance, greatly boosting the company's exposure.
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