The board of China Life Insurance Co (中國人壽) yesterday agreed to acquire the assets and liabilities of PCA Life Assurance Co (保誠人壽), a local arm of Prudential Plc, excluding its bancassurance and telephone marketing businesses for the nominal sum of NT$1, company executives said.
In exchange, the British insurer will pay NT$2.183 billion (US$62.7 million) for 145.5 million common shares in China Life at NT$15 per share through a private share placement, China Life senior vice president Tony Hsu (許東敏) told a media briefing.
After the capital injection, Prudential Plc will become the Taiwanese life insurer’s largest shareholder, with a 9.95 percent fully diluted stake.
The deal was expected to be completed by the third quarter of this year, pending regulatory approvals, a press statement said.
After the merger, China Life will leap to become the nation’s fourth-largest life insurer with a market share of 8.35 percent in first-year premiums, up from its current 6.08 percent market share. Its assets will increase from NT$313.2 billion to NT$508.8 billion and it will have a clientele of 1.55 million policyholders, up from 610,000, the statement said.
In its filing to the Taiwan Stock Exchange yesterday, PCA Life said its net assets totaled more than NT$5 billion.
Tony Wilkey, chief operating officer of Prudential Asia, said the rights of existing policyholders and employees would be safeguarded and the firm would continue to invest in the local market. The transaction will give Prudential Plc stronger capital reserves, he said.
As an EU domiciled company, Prudential adheres to the EU Insurance Group Directive (IGD), under which it is required to carry significant economic capital reserves.
Upon the transaction’s completion, there would be a net increase in Prudential’s IGD surplus of approximately £700 million (US$1 billion) to £800 million, further strengthening its already robust IGD position, Wilkey said.
China Life president Alan Wang (王銘陽) said that the partnership would help his company build a complete agency channel after retaining some of PCA Life’s 10,000 agencies, while leveraging Prudential’s sales channels to sell its own policies.
Policies sold by agencies would bring in premiums for China Life, while Prudential maintains its sales via bancassurance and telephone marketing channels, he said.
PCA Life vice president Daphne Wang (王淑華) said that the parent UK insurer’s bancassurance partnership with Standard Chartered Bank would not be affected by the China Life transaction, while it will maintain its 5 percent stake in E.Sun Financial Holding Co (玉山金控).