Fri, Jul 15, 2011 - Page 11 News List

FSC gives its final approval to Nan Shan purchase

DONE DEAL:Ruen Chen must put 70% of its Nan Shan shares into trust for 10 years, and Ruen Chen’s stakeholders must not borrow from it or make it buy from their firms

By Crystal Hsu  /  Staff Reporter

The Financial Supervisory Commission (FSC) yesterday gave its go-ahead to the purchase of Nan Shan Life Insurance Co (南山人壽) by a local consortium, one month after the regulator gave its conditional approval to the deal.

Ruen Chen Investment Holding Co (潤成投資), which won the bid in January to acquire American International Group (AIG) Inc’s 97.57 percent stake in Nan Shan for US$2.16 billion, has met the commission’s requirements to demonstrate its financial adequacy and long-term commitment, the FSC said in a statement.

Last month, the commission gave its conditional green light and asked the buyer group to put an extra NT$6 billion (US$208.14 million) in a custodial account, given Nan Shan’s weight in the domestic life insurance industry. The commission demanded the buyer meet the requirements within 60 days and said the deal would take effect only after the commission had certified that all the requirements had been met.

Ruen Chen comprises supermarket operator Ruentex Development Co (潤泰新), cement and chemical fiber maker Ruentex Industries Ltd (潤泰全), shoemaker Pou Chen Corp (寶成工業) and other firms.

Nan Shan is the third-largest local insurer by total premiums, serving 4 million policyholders and employing 4,000 staff.

In yesterday’s statement, the FSC said Ruen Chen should put 70 percent of its Nan Shan shares into trust for 10 years. The buyer group must not terminate or alter the terms of the trust without FSC consent, the commission said.

Furthermore, Ruen Chen’s major stakeholders — Samuel Yin (尹衍樑), chairman of Ruentex Group (潤泰集團), Tsai Chi-jui (蔡其瑞) of Pou Chen, and others — must not borrow from Nan Shan or make the insurer buy equities or real estate from their firms, the FSC said.

In addition, Ruen Chen has to cap its debt ratio at 48 percent of the acquisition price and lower the debt figure year-by-year, the commission said. It must not enter joint land development ventures with Nan Shan either, it added.

The financial regulator’s final approval of the deal brings to an end the US insurer’s second bid to sell off its local subsidiary, after AIG failed to sell Nan Shan to a Hong Kong consortium last year due to FSC concerns about the possible involvement of Chinese investors.

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