The Financial Supervisory Commission (FSC) yesterday said it would extend the government’s receivership of cash-strapped Kuo Hua Life Insurance Co (國華人壽) for another year, allowing the receiver more time to secure a buyer.
The move marked the fourth time the receivership has been extended, as the current one is due to expire tomorrow and the receiver — the semi-official Insurance Stabilization Fund (ISF, 保險安定基金) — is in the process of arranging an auction in late October.
The financial regulator has taken control of the insolvent company since Aug. 4, 2009.
As of March 31, the insurer had an accumulated net loss of NT$74.63 billion (US$2.49 billion), company data showed.
ISF chairman Chu Yun-peng (朱雲鵬) attributed the losses mainly to sustained negative interest spreads and declining working capital.
Liability costs average 5 percent, meaning Kuo Hua needs to achieve higher investment returns to break even, Chu said, adding that it was a difficult challenge given a low-interest environment at home and volatile markets abroad.
The FSC said it would ease capital requirements for buyers and allow governance forbearance for up to 10 years.
Furthermore, buyers do not have to be in the finance business and Chinese capital is allowed as long as it does not exceed required levels, the FSC said.
Prospective buyers should file paperwork by Aug. 17 and conduct due diligence between Aug. 17 and Sept. 28, the ISF said.
An arrangement for state-owned Taiwan Financial Holding Co (台灣金控) to buy Kuo Hua fell through because of differences over compensation and other issues. The company was the first local life insurer to be brought under government receivership in 40 years.