Economic and financial officials said yesterday they would help protect the rights of existing policyholders and employees when reviewing the ownership transfer of Nan Shan Life Insurance Co (南山人壽) to its Hong Kong-based buyer.
A consortium led by Primus Financial Holdings Ltd and Hong Kong-based China Strategic Holdings Ltd (中策集團) reached an agreement with American International Group Inc (AIG) last month to acquire AIG’s 97.57 percent stake in Nan Shan for US$2.15 billion.
The deal still needs approval from regulators here and in the US. Media in Taiwan have questioned if Chinese capital plays any part, which would be illegal because the China is banned from investment in the local financial sector.
Vice Minister of Economic Affairs Huang Jung-chiou (黃重球) told a legislative session yesterday that his ministry had yet to receive a request for ownership transfer from Primus Financial, and officials said they would look into Primus Financial’s shareholder and capital structure for potential China-sourced funds.
“The transfer will entail a cross-ministerial review and if any agency raises an objection, the deal will be rejected,” Huang said.
Primus Financial will have first to submit an ownership transfer request with the Ministry of Economic Affairs’ (MOEA) Investment Commission, which will then screen its capital structure, Huang said.
The commission will investigate whether the deal complies with the ban on Chinese capital, which is not allowed to own more than 30 percent or a controlling stake in the Hong Kong buyer, he said.
The proposed transfer will then be subject to reviews by the central bank, the Financial Supervisory Commission (FSC), the Council for Labor Affairs and the Mainland Affairs Council. Finally, a 16-member panel from the ministries will call a vote on the matter and any objection will sink the deal, Huang said.
FSC Vice Chairwoman Lee Jih-chu (李紀珠) said her commission had made it clear that Nan Shan must put assets in the custody of a designated bank and notify the commission of capital flows over certain amounts to protect the rights of present policyholders and employees.
Lee said the commission had asked the buyer to ensure the transfer would not have a negative impact on policyholders if they opt to terminate contracts.
The insurance company has about 4 million policyholders and Nan Shan has about NT$1.5 trillion (US$46 billion) in assets and employs 380,000 insurance agents, Lee said.
Huang Tien-mu (黃天牧), director-general of the insurance bureau, said yesterday executives of both AIG and new buyer Primus Financial have said that Nan Shan had committed to give control of NT$14 billion (US$429.8 million) in provident funds to its employees and labor union.
“I was told so face-to-face,” Huang Tien-mu said at a media briefing.
Primus Financial said it would transfer control of the funds when it receives regulatory approval and completes the acquisition, he said.
Primus Financial, however, has also expressed difficulty with immediately repaying the provident funds in cash because some of the funds were tied up in various investments, many of which yielded poor returns during the economic downturn.
Therefore, the company said it hoped some of the funds could be repaid in cash when the time is right to redeem the investments, which it said would also be in the interest of the employees, Huang Tien-mu said.
The insurer’s labor union, however, sees the move as a stalling tactic and has accused the potential buyer of being insincere in addressing the issue, Huang Tien-mu said.
Primus Financial said yesterday that it would continue to negotiate with sales agents and other employees on the issue of provident funds.
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