Shares in Taiwan Life Insurance Co (台灣人壽) plunged 3.99 percent to NT$22.85 yesterday, compared with the TAIEX’s 0.69 percent fall, as the company moved closer to finding a buyer amid recent market volatility that may weigh on its net worth.
The 65-year-old insurer is seeking a buyer as major shareholders Long Bon International Co (龍邦), a Greater Taichung-based hotel service provider and state-owned Bank of Taiwan (台灣銀行) have reiterated plans to be investors rather than operators.
Taiwan Life posted NT$5.55 billion (US$187.09 million) in pretax income in August, down 29.7 percent from July and 13.7 percent from a year ago, company data showed. Revenue totaled NT$47.33 billion in the first eight months, down 25.5 percent from last year.
Insurance policy sales jumped steeply last year, after the Financial Supervisory Commission lowered assumed interest rates twice to reflect the macro-environment, thereby pushing policy costs higher this year.
The two prospective buyers, CTBC Financial Holding Co (中信金控) and Waterland Financial Holding Co (國票金控), reportedly submitted their offers yesterday ahead of the deadline for bid tendering, local media said.
The offers are said to fall between NT$20 billion and NT$23 billion to be carried out through a share-trading scheme, although neither party would comment on acquisition speculations.
“The company will not disclose details about the bidding process at this stage,” a Taiwan Life communications official said by telephone and refused to elaborate.
CTBC Financial, which recently bought the local unit of the Canadian insurance giant, Manulife International Ltd, remains interested in expanding its life insurance stake via acquisitions when it sees fit, company deputy spokeswoman Rachael Kao (高麗雪) said.
The conglomerate has no intention to alter its bank-focused business strategy, but would lower its weight from the current 90 percent to between 70 percent and 75 percent in the long run, Kao said.
“We would like to increase the share of life insurance to 20 percent or 25 percent of total assets, from the current 7 percent or 8 percent,” Kao said.
Toward that end, CTBC Financial would buy more insurers at reasonable prices, Kao said, adding the company has NT$40 billion cash on hands as of June 31 to finance expansion ventures, if necessary.
Waterland Financial, the nation’s smallest financial service provider due to its emphasis on bills financing, is eying a life insurer with similar capitalizations to grow its scale and assets, company spokesman Andrew Chiu (邱銘恩) said.
“We prefer a life insurer with a capital of NT$15 billion or less, compared with our capital of NT$26.2 billion,” Chiu said.
He added the company would make an exception for targets with larger capitalizations, if necessary.
Waterland Financial is also interested in acquiring commercial banks and securities houses, but there are few lenders available for sale, Chiu said.
It may take one to three months for acquisition attempts involving Taiwan Life to settle given its latest progress, Chiu said.