The Democratic Progressive Party (DPP) legislative caucus is set to propose suspending Transglobe Life Insurance Inc’s merger with Kuo Hua Life Insurance Co tomorrow in the legislature, because it says the company’s operations and the actions of the Financial Supervisory Commission (FSC) are both questionable.
DPP Legislator Gao Jyh-peng (高志鵬) told a press conference that Transglobe’s winning of the auction for the insolvent Kuo Hua with a bid of NT$88.37 billion (US$3 billion) on Nov. 27 posed many questions that need to be answered.
Taiwan Life Insurance Co, a subsidiary of state-owned Taiwan Financial Holdings, was set to take over Kuo Hua until the FSC decided to hold an auction, but the commission never explained why its policy changed, Gao said, adding that the winning bid was a lot lower than the NT$200 billion Taiwan Financial estimated as being required to take over Kuo Hua.
The semi-official Taiwan Insurance Guaranty Fund (保險安定基金) is paying Transglobe the sum to cover Kuo Hua’s losses, which had increased by NT$17 billion since the FSC took over the company in 2009. Gao accused the FSC of wasting taxpayers’ money.
Gao said that the FSC is suspected to have favored Transglobe because of the connections of its two shareholders: Stiven Peng (彭騰德), son of Meifu Property Development Group chairman Tom Peng (彭誠浩); and Stiven Peng’s wife, Lin Wen-hui (林文惠), daughter of Taiwan Glass Industry Corp president Lin Por-fong (林伯豐), who has close ties to the Chinese Nationalist Party (KMT).
The DPP caucus is set to hold a special session today in the legislature’s Economics Committee on the merger and submit a proposal to suspend the deal, the lawmaker said.
FSC Insurance Bureau Deputy Director-General Chen Kai-yuan (陳開元) said the FSC had reviewed the operational status of all bidders and the bidding process was transparent and legal.
Regarding the large difference between Taiwan Financial’s initial estimate and the final bidding price, Chen said the financial assessment methodology for an insurance company varied between companies and that the FSC stood by its own assessment.
Kuo Hua’s net value as of the end of the third quarter was about NT$70 billion in the red, Chen said, adding that all information on the firm’s financial performance was on its Web site.
Chen said the commission would “respect and abide by all legally binding resolutions.”