Tue, Nov 23, 2010 - Page 12 News List

Nan Shan won’t be listing: FSC

RESTART:Potential local buyers of AIG’s local unit, Nan Shan Life, began a review process yesterday after a sale to a Hong Kong consortium was rejected in August

By Crystal Hsu  /  Staff Reporter

As potential Taiwanese buyers launched due diligence reviews of American International Group’s (AIG) local unit yesterday, Financial Supervisory Commission (FSC) Chairman Chen Yuh-chang (陳裕璋) confirmed the US parent is not interested in listing the Taiwan subsidiary to ease its financial woes.

Chen made the remarks in response to lawmakers’ questions on whether the regulator would consider allowing Nan Shan Life Insurance Co (南山人壽) to trade shares on the local bourse to help the US firm pay down its debts without selling the insurer.

“The commission made several contacts with AIG and conveyed related options, including listing Nan Shan,” Chen told the legislature’s Finance Committee.

AIG has yet to make a positive response, indicating it is not interested, Chen said. He said there is little the commission can do to prevent the sale of Nan Shan as long as AIG complies with five principles when finding a purchaser.

The government rejected AIG’s sale of Nan Shan on Aug. 31 to a Hong Kong consortium, comprising China Strategic Holdings Ltd (中策集團) and Primus Financial Holdings Ltd (博智金融), on concern over its capital-raising ability and long-term commitment.

Potential buyers must also promise to protect the rights of existing Nan Shan policyholders and employees, demonstrate professional knowledge in running an insurer and follow rules governing the source of funding, Chen said.

Nan Shan, which accumulated NT$12.58 billion (US$410.77 million) in losses as of the third quarter, is not qualified for initial public offering applications, but the commission would consider special arrangements, Chen said.

Nan Shan, the third-largest local insurer by market share, has 4 million policyholders and more than 40,000 staff. Cathay Financial Holdings Co (國泰金控), Fubon Financial Holding Co (富邦金控) and Chinatrust Financial Holding Co (中信金控) reportedly all took part in the due diligence review, in addition to a consortium led by Ruentex Group (潤泰集團) chairman Samuel Yin (尹衍樑).

AIG plans to settle the bidding on Dec. 3, the Chinese-language Economic Daily News reported yesterday.

Chinese Nationalist Party (KMT) Legistlator Alex Tsai (蔡正元) urged the commission to consider extending the “professional shareholders’” requirement to the insurance industry, whereby professional institutional shareholders may own a sizable number of shares in insurance firms to improve operations and earnings.

Investment and mutual funds are already subject to the requirement, Tsai added.

Chen said the commission is drafting a consumer financial protection bill aimed at better safeguarding the rights of consumers and solving disputes arising from purchases of investment products.

To that end, the commission will hold a public hearing this week to strengthen the bill’s content, Chen said, adding that he expects to submit the bill to the Cabinet for review by the end of the year.

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