Nan Shan Life Insurance Co (南山人壽) yesterday rejected a media report that said its owner was forced into a fire sale to bolster the insurer’s ailing financial condition.
The Chinese-language Mirror Media said that Ruentex Group (潤泰集團) chairman Samuel Yin (尹衍樑) was compelled to sell a 36.16 percent stake in the China-based hypermarket chain to Alibaba Group Holding Ltd (阿里巴巴) to cope with mounting financing costs and help it meet capital requirements.
The stake sale is valued at about US$2.88 billion, while Ruentex is expected to gain NT$28 billion (US$931.5 million) in profit.
While the company last year posted earnings of NT$26 billion, it also faced NT$49.1 billion in unrealized losses, the report said, adding that the value of the company’s immense portfolio of overseas investments is highly sensitive to foreign-exchange movements.
Nan Shan in a statement said that its risk-based capital requirement ratio — a measure of a life insurer’s financial resilience — was 272 percent at the end of June, well above the required 200 percent, and that it has no pressing need for a capital injection.
The company has also been given favorable credit ratings from agencies such as Taiwan Ratings Co (中華信評) and Standard & Poor’s.
Nan Shan said that its profits in the first 10 months gained 3 percent annually to NT$17.16 billion, while its unrealized investment performance at the end of last month gained NT$21.6 billion.
Mirror Media did not verify its claims and maliciously used dated earning figures to mislead readers, the firm said.
In related news, media personality Vivian Tsai (蔡玉真) raised concerns that the stake sale might violate Yin’s agreement with the Financial Supervisory Commission.
The commission in 2011 approved Yin’s bid to acquire Nan Shan with the stipulation that the new owner must set aside NT$30 billion to safeguard the interests of policyholders.
The reserve amount was reduced to NT$20 billion when Ruentex later that year initiated a NT$10 billion capital injection.
Tsai said that the stake sale includes NT$16 billion of shares in Ruentex, which had been part of the reserve.
Ruentex had filed to replace the shares with NT$16 billion in cash, and had on Wednesday last week placed the amount into the reserve, Insurance Bureau Deputy Director-General Tsai Li-ling (蔡麗玲) said.
Meanwhile, Ruentex has remained mum on its decision to price the stake sale at a 24.41 percent discount.
Mirror Media also reported that Yin’s hypermarket chain has been facing stiff competition from China’s e-commerce giants, while Alibaba has been touting its vision for retail that integrates online-to-offline commerce.
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