Print

Mail

wiki links

Taiwan Life Insurance outbids rival to win Kuo Hua Insurance auction

Taiwan Life Insurance Co (台灣人壽), the country's eighth-largest life insurer, acquired debt-ridden property insurer Kuo Hua Insurance Co (國華產險) in an auction yesterday. It said it plans to set up a new property insurance firm soon.

The deal marks the first time in more than three decades that an insurer was forced to pull out of the market, after the cash-strapped Kuo Kuang Life Insurance (國光人壽) was ordered to cease operations in April 1970.

Taiwan Life Insurance yesterday outbid Taiwan Fire & Marine Insurance Co Ltd (台灣產物保險) by requiring a lower compensation of NT$1.056 billion (US$32.66 million) from the government's Insurance Stabilization Fund (保險安定基金), according to a press release issued by the semi-official Taiwan Insurance Institute (保險事業發展中心).

The Insurance Law (保險法) requires insurers and their non-life counterparts to each contribute 0.1 percent and 0.2 percent of total premiums to the fund in a bid to preserve insured entities' rights while maintaining financial market's stability, once insurers become insolvent.

The Taiwan Insurance Institute was commissioned by Financial Supervisory Commission last November to rehabilitate and clean up Kuo Hua's assets.

Kuo Hua, the nation's smallest property insurer by capitalization, was ordered to stop writing new policies last year because it couldn't meet its financial obligations, the commission said.

"By acquiring Kuo Hua Insurance to expand its business operations, Taiwan Life can better integrate resources and offer a more complete line of insurance products to our customers," said Steve Lin (林欽淼), Taiwan Life's president and CEO, during a telephone interview yesterday.

Lin said the company will apply with the commission's Insurance Bureau within 15 days to set up a new non-life insurer with an initial capital of NT$500 million. It expects to expand the investments to NT$2 billion in 10 years.

According to the bidding contract, Taiwan Life will retain more than 180 employees, 50 percent of Kuo Hua's original workforce, in the new property firm.

Lin promised that the company will do its best to assist the rest of the staff switch jobs.

Taiwan Life will only take over Kuo Hua's policies, while the bankrupt insurer's eight branches nationwide will be left for the Taiwan Insurance Institute to deal with, Lin said.

Kuo Hua was established in 1962 with paid-in capital of NT$1.4 billion. The insurer's business is concentrated in auto insurance, including both voluntary and compulsory lines.

The Taiwan Insurance Institute has been helping clean up Kuo Hua's financial information and assisting its policyholders with compensations.
This story has been viewed 1824 times.