The Financial Supervisory Commission (FSC) yesterday warned Nan Shan Life Insurance Co (南山人壽) not to embark on development ventures with affiliated firms, as such a move would violate pledges it made to gain approval for ownership changes last year.
The FSC reminder came after Nan Shan, the nation’s third-largest life insurer, on Thursday won a contract for a land redevelopment project next to the Taipei 101 tower with a record high bid of NT$26.89 billion (US$896.5 million).
Nan Shan aims to build two office blocks in Taiwan’s most costly real-estate area, Taipei’s Xinyi (信義) District, that will include retail, entertainment and housing facilities.
In January last year, US insurance giant American International Group Inc (AIG) sold Nan Shan to Ruen Chen Investment Holding Co (潤成投資) for US$2.16 billion in cash. Ruen Chen is jointly owned by 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).
Shares in Ruentex Development, Ruentex Industries and Pou Chen rallied yesterday on expectations that they would all benefit from the multi-billion redevelopment project, analysts said.
“The commission will ask the company to explain ... how it intends to carry out the project to ensure it will uphold related agreements,” the FSC said in a statement.
The financial regulator last year made major shareholders in Nan Shan Life promise not to borrow from the insurer, make it buy equities or real-estate properties from affiliates, or enter joint development ventures.
All parties involved made the pledge in writing before the FSC gave its go-ahead to the acquisition of Nan Shan Life by Ruen Chen Investment Holding Co, the commission said.
‧ The firm is the nation’s third-largest life insurer.
‧ Recently won a NT$26.89 billion land redevelopment project next to the Taipei 101 tower.
The requirements are intended to protect the rights of Nan Shan’s four million policyholders and belay suspicions that Ruen Chen bought the insurer from AIG for ulterior motives, the FSC said.
The commission said it related its concerns to the Taipei City Government during a review of bidding candidates for the redevelopment project.
The FSC said it would step up inspection of Nan Shan and keep an eye on the investment plan.