FSC lays down ground rules for Nan Shan bids

SELLING UP::FSC officials held a closed-door meeting with several high-ranking AIG officials, including chief executive officer Robert Benmosche, yesterday in Taipei

Staff writer, with CNA

Fri, Dec 17, 2010 - Page 11

The Financial Supervisory Commission (FSC) reiterated five guidelines yesterday that American International Group (AIG) must follow when it holds a second round of bidding to sell its Taiwanese subsidiary, Nan Shan Life Insurance Co (南山人壽).

In response to lawmakers’ questions about the Nan Shan sale at a meeting of the legislature’s Finance Committee, Financial Supervisory Commission Chairman Chen Yuh-chang (陳裕璋) said the successful buyer of Nan Shan must promise to protect the rights and benefits of policy holders, the issuer and its employees, and must abide by Taiwanese law when raising funds for the acquisition.

Chen said the buyer must then show its ability to run an insurance company and must live up to its commitment to operate Nan Shan in the long term.

The buyer must also have the ability to raise funds in the future, as necessary, to run Nan Shan.

Chen confirmed he and other FSC officials yesterday held a closed-door meeting in Taipei with several high-ranking AIG officials, including chief executive Robert Benmosche, about the US company’s revived plan to divest its 97.57 percent stake in Nan Shan.

The Chinese-language Apple Daily reported, without citing sources, that after the meeting two potential groups of buyers, led by Ruentex Group (潤泰集團) and Primus Financial Holdings Ltd (博智金融), would likely fail to gain the FSC’s approval of their bids for Nan Shan because of a lack of long-term commitment and because they do not have the ability to run a life insurance business in Taiwan.

Three local financial holding companies — Fubon Financial Holding Co (富邦金控), Cathay Financial Holdings Co (國泰金控) and Chinatrust Financial Holding Co (中信金控) — have also expressed an interest in bidding for Nan Shan.

Local media have reported that Fubon Financial is a potential bidder, although the company has refused to comment on the matter.

However, because Cathay Financial has a higher debt-asset ratio, Chinatrust Financial is more likely to become the successful buyer, Merril Lynch brokerage said.

Last year, Primus Financial teamed up with China Strategic Holdings Ltd (中策集團) to beat out Chinatrust Financial in the bid to buy Nan Shan for US$2.15 billion, but the FSC and the Ministry of Economic Affairs rejected their application to acquire the company on Aug. 31 on concerns about the Hong Kong consortium’s long-term commitment and financial capability.