The Financial Supervisory Commission (FSC) yesterday asked Ruen Chen Investment Holding Co (潤成投資), the winning bidder for Nan Shan Life Insurance Co (南山人壽), the local unit of cash-strapped American International Group Inc (AIG), to present further proof of its long-term commitment and financial strength within one month.
Ruen Chen has to submit proof of NT$30 billion (US$1 billion) cash or the equivalent in assets to show it has the financial means to run the business for the next decade, the regulator said.
The buyer consortium, comprised of supermarket operator Ruentex Development Co (潤泰新), cement and chemical fiber maker Ruentex Industries Ltd (潤泰全) and shoemaker Pou Chen Corp (寶成工業), offered to acquire AIG’s 97.57 percent stake in Nan Shan for US$2.16 billion in cash.
To gain regulatory approval, Ruen Chen must put 100 percent of Nan Shan’s shares into trust for 10 years as the FSC has underscored the importance of long-term commitment and capital increase capability, the commission said.
Ruen Chen, which has paid-in capital of NT$2.5 billion (US$84.57 million), has indicated that it plans to introduce NT$10 billion in new funds later this year to meet capital increase needs and demonstrate the financial strength of its major shareholders, according to the commission.
Also to that end, the buyer has pledged to lower its debt ratio to 48 percent, meaning it will finance the acquisition chiefly with its own funds and cap bank loans at 48 percent of the purchase amount, the commission said.
Ruen Chen and major shareholders have further promised not to subscribe common or priority shares in Ruentex or Pou Chen or buy their real-estate properties via Nan Shan, the commission said.
Ruentex also owns construction and land development businesses.
The commission, which has promised to wrap up the review in the first half, has also required the buyer to safeguard the rights of existing employees and policyholders.
Ruen Chen has agreed to honor all policy contracts, retain all employees and keep their compensation and benefits unchanged for at least two years, the commission said.
POOR INTERNAL CONTROLS: Insurance Bureau Director-General Shih Chiung-hwa said the company is expected to get back on track while its chairman is suspended The Financial Supervisory Commission (FSC) yesterday fined Shin Kong Life Insurance Co (新光人壽) NT$27.6 million (US$939,415) for a reckless investment that endangered its solvency, and suspended its chairman Eugene Wu (吳東進) for poor supervision. The penalty is the second-highest in a single case after Nan Shan Life Insurance Co (南山人壽) was fined NT$30 million in September last year and its chairman Du Ying-tzyong (杜英宗) suspended for two years, the commission said. In three rounds of special and regular examinations conducted since last year, the commission found that Shin Kong Life had given too much power to an asset and liability management committee
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