The financial regulator has ordered a small local property insurance company to close business immediately after the company’s financial condition deteriorated to such a level that it threatened the interests of policyholders.
The Financial Supervisory Commission yesterday ordered Walsun Insurance Co (華山產險) to cease operations after the insurer failed to raise fresh capital to meet the regulator’s capitalization standards, the commission said in a statement, citing Article 143-4 of the Insurance Act (保險法).
The commission also appointed the semi-official Taiwan Insurance Institute (保險事業發展中心) as receiver of Walsun and dispatched officials from the institute to help liquidate the insurer’s assets and look for buyers, the statement said.
The Taipei-based company said in a different statement it would cease all new business starting yesterday, but would continue to provide services to its policyholders.
“Starting at 8:30am on Jan. 17, the board of directors and supervisors at the company will cease their functions and transfer management and liquidation to the receiver,” Walsun said in the statement.
Walsun was known as Tai Ping Insurance Co (太平產險) before it gained approval to change its name in 2007. Based on the commission’s tallies, Walsun posted a negative net value of NT$870 million (US$2.6 million) at the end of September, with accumulated losses of NT$2.87 billion.
By the end of last year, the company had secured a 1.6 percent share in the nation’s property insurance market, with 620,000 insurance policies remaining, the commission said in its statement.
Of these policies, 280,000 were for compulsory automobile liability insurance and 20,000 for residential earthquake insurance. These will obtain 100 percent protection from the Taiwan Insurance Institute’s NT$2 billion stabilization fund, institute chairman Shih Tsan-ming (石燦明) said yesterday at a press conference that was carried by local cable business news channel UBN.
Holders of the remaining Walsun policies will be eligible for a 90 percent compensation from the fund.
Walsun’s capital adequacy had deteriorated rapidly in recent years, with its risk-based capital ratio falling below the 200 percent level as required by the financial regulator. The company’s business also slowed amid fierce competition in the local property insurance market, which is dominated by rivals such as Fubon Insurance Co (富邦產險), Mingtai Fire and Marine Insurance Co (明台產險) and Shin Kong Insurance Co (新光產險).
Shih and FSC Chairman Sean Chen (陳冲), who attended the press conference, said other local property insurers were all financially sound.
The risk-based capital ratios at other property insurers are above 300 percent, the commission said.
Walsun was the second local property insurer to be taken over by the government since 2005, Kuo Hua Insurance Co (國華產險).