Thu, Jul 26, 2007 - Page 12 News List

Koo family buys Winterthur branch

GREATER PRODUCT LINE China Life's acquisition of the Swiss insurer should help the company develop its insurance, retirement and financial planning services

By Jackie Lin  /  STAFF REPORTER

China Life Insurance Co (中國人壽), controlled by the Koo () family, said yesterday it would acquire smaller rival Winterthur Life's Taiwan branch for approximately NT$400 million (US$12 million) in a bid to sharpen its competitiveness and boost profitability.

Taipei-based China Life and the Swiss insurance company Winterthur signed an agreement yesterday afternoon after the local bourse had closed.

Shares of China Life closed down NT$0.35 at NT$19.2 on the Taiwan Stock Exchange yesterday.

The merger was expected to be completed by October after government approval, China Life senior vice president Tsai Sung-ching (蔡松青) said at a press briefing.

"China Life will receive all the assets, liabilities and business operations of Winterthur Life's local branch. Policyholders' rights and interests will be well protected," Tsai said, without providing figures.

"Although our market share will not significantly increase, the acquisition can effectively expand our product lines," he said.

China Life is scheduled to hold a provisional shareholder meeting on Sept. 13 to seek shareholder approval of the merger.

The latest acquisition came after Taishin Financial Holding Co (台新金控) announced earlier last month it would form a joint venture with Dutch insurer Aegon NV in Taiwan to explore the life insurance and pension market, with Taishin Financial holding 51 percent of the new insurer, to Netherlands-based Aegon's 49 percent.

Winterthur is part of AXA, Europe's second-biggest insurer by revenue. It established its local branch in 1993.

It took in first-year premiums of NT$1.66 billion for the first half of the year, jumping 99 percent from a year ago to command a 0.4 percent market share.

Among them, premiums collected from investment-linked insurance policies -- the Swiss insurer's main strength -- grew 114 percent year-on-year.

Winterthur Life's Taiwan branch has 60,000 policyholders and 480 employees nationwide, including 350 agents.

Government information showed that Winterthur Life saw losses in its Taiwan operations widen over the past three years. It posted a net loss of NT$292 million last year and a net loss of NT$58 million in the first quarter this year.

In comparison, China Life is strong in selling "participating policies," under which policyholders are eligible to receive dividends from the company's surplus.

It collected total premium income of NT$52.5 billion last year to occupy a 3.1 percent market share and reported net profits of NT$720 million, or earnings per share of NT$0.64 last year.

Tsai said the absorption of the Swiss insurer would help the company strengthen product development in insurance, retirement and financial planning.

The firm previously said it would expand its agent team from 4,000 to 10,000 by 2012.

China Life set up a representative office in Beijing in August 2005.

In April, it obtained approval by the Ministry of Economic Affairs' Investment Commission to invest US$32.3 million in its Shanghai venture. The firm has been in talks with several Chinese companies about a partnership and hopes to expedite the pace of negotiations.

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