Transglobe Life Insurance Inc (全球人壽) yesterday won the bidding at the auction for the insolvent Kuo Hua Life Insurance Co (國華人壽) with a bid of NT$88.37 billion (US$3 billion), the semi-official Taiwan Insurance Guaranty Fund (TIGF, 保險安定基金) said.
The results came as a surprise because Transglobe earlier indicated it would quit the race, leaving Chinatrust Life Insurance Co (中信人壽), Taiwan Life Insurance Co (台灣人壽) and Mercuries Life Insurance Co (三商美邦人壽) as the only three contenders.
“Transglobe will take over all of Kuo Hua except for certain disputed assets,” TIGF said in a statement.
Transglobe beat two other bidders, but TIGF refused to reveal their identity or supply details on governance amnesty terms due to confidentiality agreements, said a TIGF official, who declined to be named.
Local media, including the Central News Agency, said that Chinatrust Life Insurance and Mercuries Life Insurance also took part in the bidding yesterday.
Kuo Hua is the first Taiwanese life insurer to be brought under government receivership for incurring huge losses and failing to meet capital increase requirements.
TIGF has been the official receiver since Aug 2009, but was unable to secure a buyer in two previous auctions. It said it will soon ink the deal with Transglobe and carry out the transfer.
To attract buyers, the Financial Supervisory Commission (FSC) has agreed to grant Kuo Hua greater governance flexibility under which Transglobe will not be responsible for negative interest spread caused by Kuo Hua for the next 20 years, according to FSC Insurance Bureau Director-General Joanne Tseng (曾玉瓊).
Transglobe will keep spate accounts for the sake of oversight, Tseng said.
Established in Taiwan in 1994, Transglobe said it does not suffer negative interest spread and can prop up Kuo Hua with its own earnings.
The acquisition may significantly boost Transglobe’s ranking into the top 10 in terms of market share and enlarge its sales staff to 4,500, the company said.
It added that the ownership change will not affect the benefits of Kuo Hua policyholders.