Nan Shan Life Insurance Co (南山人壽), a local subsidiary of the financially troubled American International Group Inc (AIG), said yesterday it would not rule out selling part of its shares to lure strategic investors, a Chinese-language newspaper reported yesterday.
However, New York-based AIG’s insistence on retaining control over Nan Shan’s operations could discourage potential investors, the United Evening News reported, without citing sources.
The troubled US company is reportedly planning to sell part of its 95-percent holding in Nan Shan, which has been operating in Taiwan for more than 40 years.
Nan Shan is the second-largest life insurer in Taiwan by gross premiums, behind Cathay Life Insurance Co (國泰人壽).
Early last month, Nan Shan’s board of directors approved a plan to raise NT$47.2 billion (US$1.44 billion) in capital. Under the plan, AIG agreed to inject around NT$45 billion into Nan Shan and was expected to begin making the funds available yesterday, Nan Shan vice president April Pan (潘玲嬌) said.
Another Chinese-language newspaper reported earlier yesterday that several investment banks recently approached potential buyers on behalf of AIG.
These potential investors included Cathay Financial Holding Co (國泰金控), Fubon Financial Holding Co (富邦金控), Shin Kong Financial Holding Co (新光金控) and Mega Financial Holding Co (兆豐金控), the Economic Daily News reported, citing unnamed sources.
However, some of these local financial institutions, which already have life insurance subsidiaries, denied being interested in purchasing Nan Shan. Others said they found it hard to meet AIG’s demand as they would not like to buy Nan Shan without obtaining control over the company’s board, the reports said. Hence, it is more likely that companies or conglomerates that are not involved in the insurance business would show an interest in buying Nan Shan.
Industry experts said there are very few local life insurers other than Cathay Life and Shin Kong Life that have the capability to take over Nan Shan given its size. However, both Cathay Life and Shin Kong Life would have difficulty integrating Nan Shan because of overlapping business and distribution channels.
Shin Kong Financial Holding Co (新光金控) president Victor Hsu (許澎)told investors on a conference call on Thursday that Shin Kong Life had no plans to buy Nan Shan at the moment.
Hsu said Nan Shan’s most valuable asset was its local distribution channels and sales network, but they overlap with those of Shin Kong.
The only advantage in buying Nan Shan would be to increase Shin Kong’s business scale, which is not needed at the moment, he said.
PCA Life Assurance Co (保誠人壽), a local life insurance arm of the London-based financial services company Prudential PLC, declined to comment on rumors that it was interested in buying Nan Shan, saying it had not heard anything from its parent company.