Sat, Jun 09, 2007 - Page 12 News List

Taishin Financial agrees to form venture with Aegon

TERMS OF THE DEALThe Netherlands-based insurer will also buy approximately 2.5 percent of Chang Hwa Commercial Bank, Taiwan's No.8 lender, from its new partner

By Jackie Lin  /  STAFF REPORTER

Taishin Financial Holding Co (台新金控) yesterday announced it had agreed with Aegon to form a joint venture in Taiwan to explore the life insurance and pension market via Taishin Financial's network.

Taishin Financial will hold 51 percent and Netherlands-based Aegon 49 percent of the new insurer, which will have an initial capital of NT$2 billion (US$60.6 million).

The name of the joint venture has yet decided, but both sides expect the firm to start operations within one year, subject to final agreement, regulatory licensing and approval, Taishin Financial president Lin Keh-hsiao (林克孝) said during a press briefing yesterday.

With Taishin Financial chairman Thomas Wu (吳東亮) also attending the event, Lin and Aegon Life Insurance (Taiwan) Inc (全球人壽) president and chief executive officer James Liu (劉先覺) signed a memorandum of understanding to mark the start of the new firm.

Focus on insurance

The new joint venture will focus on insurance and distribute products through the extensive Taishin network, which includes Taishin International Bank (台新銀行), Taiwan Securities Co (台証證券), the Taishin Insurance Agency (台新保代) and Taishin Insurance Brokers (台新保經).

Taishin's businesses have a combined customer base of 4 million and a nationwide distribution network of 200 locations.

Under the terms of the deal, Aegon will also acquire approximately 2.5 percent of Chang Hwa Commercial Bank (彰化銀行) from Taishin Financial.

The financial services provider will have to divest the batch of more than 160 million shares before next Friday to comply with a February ruling of the Financial Supervisory Commission.

The commission made its decision in January after Taishin Financial and its banking unit failed to maintain their capital adequacy ratios above the required thresholds.

Shares of Chang Hwa bank yesterday closed up NT$0.05 at NT$19.15.

NT$24 per share

As Taishin Financial spent around NT$24 per share to buy 2.5 percent of the state-run lender since last June, it expected to book a loss of over NT$800 million in the second quarter, Lin said.

By acquiring a share of Chang Hwa Bank, the nation's eighth largest lender, Aegon expects to strengthen its cooperation with Taishin Financial, Liu said.

With Chang Hwa's 171 branches and 4.7 million customers nationwide, the joint venture will have a solid customer base of more than 8 million.

Aegon Taiwan, which received total gross premiums of NT$40 billion to occupy a 2.5 percent market share last year, distributes insurance products through 29 local banks it has signed deals with and through more than 700 agents. Aegon has more than 1 million customers nationwide.

Despite the establishment of the joint venture, Liu said Aegon Taiwan would remain an independent operation.

The deal was announced yesterday afternoon after the local bourse closed and before the Netherlands' stock market opened.

Shares of Taishin Financial closed down NT$0.15 at NT$16.55 on the TAIEX yesterday.

Between 2003 and last year, Taiwan's insurance market grew at an annual rate of 15 percent, the Life Insurance Association (人壽保險公會) said.

Growing popularity

Over the last several years, insurance products have grown more popular. Banks sold a total of US$2.3 billion in insurance products in 2003 and the figure jumped to more than US$5.6 billion last year, posting an average annual growth rate of 35 percent.

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