The Financial Supervisory Commission (FSC) yesterday placed Global Life Insurance Co (國寶人壽) and Singfor Life Insurance Co (幸福人壽) under government receivership, as the two insurers had failed to contain financial losses or management malpractices.
“We have no choice but to take the drastic step at 5:30pm to maintain market order and stability,” FSC Chairman William Tseng (曾銘宗) told a news conference.
As of June 30, Global Life’s negative net worth had ballooned to NT$25.2 billion (US$831.7 million) from NT$100 million in 2006, while that of Singfor had expanded to NT$23.9 billion from NT$1.7 billion during the same period, the commission’s data showed.
“Continued delay will raise compensation costs that have to be paid to buyers,” Tseng said.
The FSC had prodded the two insurers to draw up financial improvement measures, but neither came up with an effective plan. Tseng said the receivership, which is to last for two years, will not affect the rights of their employees, customers and policies.
Global Life has 393,000 customers with 790,000 policies, while Singfor Life has 362,000 customers with 260,000 policies, the data indicated. Global Life has 545 employees, while Singfor has 706.
The semi-official Insurance Stabilization Fund has been appointed the official receiver, aided by the Taiwan Insurance Institute and the Central Deposit Insurance Corp, starting yesterday evening.
The stabilization fund aims to find buyers for the two insurers within six or nine months through public auctions, company vice president Barry Tsai (蔡康) said.
Global Life and Singfor Life could be the last two local life insurers needing government bailouts, as the commission is studying measures that would allow authorities to intervene once a firm’s capital adequacy ratio drops below 50 percent, Tseng said.
Healthy insurers are required to maintain a 200 percent capital adequacy level.
Chaoyang Life Insurance Co (朝陽人壽) also failed to meet the test, but had much smaller losses, said Joanne Tseng (曾玉瓊), director-general of the commission’s Insurance Bureau.
The commission has imposed a three-month foreign travel ban on the board directors of Global Life and Singfor Life, as they may be held responsible for mismanagement in terms of internal oversight, investment, capital use and other practices, she said.
It is the first time the government took over control of two insurers on the same day, after securing a buyer in November 2012 for insolvent Kuo Hua Life Insurance Co (國華人壽). The government had to pay NT$88.37 billion in compensation for Kuo Hua, which was under government receivership for more than three years.
It will take about NT$50 billion to secure buyers for Global Life and Singfor Life, based on their losses.
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