A Hong Kong consortium said yesterday it was considering whether to appeal Taiwan’s rejection a day earlier of its bid to buy a local insurance company after expressing deep regret over the setback.
Raymond Or (柯清輝), vice chairman of China Strategic Holdings Ltd (中策集團), which teamed up with Primus Financial Holdings Ltd (博智金融) to buy a 97.57 percent stake in Nan Shan Life Insurance Co (南山人壽), said the group would hold talks with American International Group Inc (AIG) before deciding whether to appeal.
AIG is the parent of the Taiwanese insurer, which has 4 million policyholders, NT$1.73 trillion (US$53.9 billion) in assets and a net worth of NT$140.3 billion.
“AIG will meet with the Nan Shan board of directors and senior management in the coming days to determine how best to proceed,” said Lauren Day, a spokeswoman for New York-based AIG. “As a matter of prudence, AIG will also evaluate its options to limit its long-term commitments presented by its continued ownership of Nan Shan.”
On Tuesday, a panel under the Ministry of Economic Affairs rejected the consortium’s application to acquire Nan Shan after the Financial Supervisory Commission (FSC) raised concerns that the consortium had insufficient funding for future capital needs or a long-term commitment to run Nan Shan.
The consortium can appeal to the Cabinet within 30 days of receiving the official document. In a statement to the Hong Kong Stock Exchange, China Strategic said it had yet to receive direct official notification from either the FSC or the MOEA’s Investment Commission about the deal’s rejection.
China Strategic said its shares would continue to be suspended until it receives official notice from Taiwan. Shares of the company have been suspended since 2:30pm on Tuesday in Hong Kong.
Primus Financial yesterday criticized the government’s decision, saying it would discourage foreign investment in Taiwan.
“We regret that the [government’s] effort to attract foreign investment has become an empty slogan” as evidenced by the lengthy review of the application, Primus Financial said in a statement.
Primus Financial said the consortium set up an escrow account of US$325 million at Citibank Hong Kong, from which it would draw funds should Nan Shan experience a shortfall in its risk-based capital.
The deposit, accounting for 15 percent of the US$2.15 billion purchase, lifts Nan Shan’s RBC ratio to 275 percent, higher than the regulatory requirement of 200 percent.
The FSC said the consortium could withdraw money from the deposit once the RBC ratio exceeds 275 percent, but Primus Financial challenged the link between the RBC ratio and capital injection requirements.
“As long as the ratio stays above 200 percent, Nan Shan has no need for a capital increase,” Primus Financial said in the statement. “No insurer in Taiwan has an escrow fund of more than US$325 million.”
Primus Financial added that it has pledged to put 70 percent of Nan Shan shares into a trust for seven years, but regretted that the FSC refused to believe its long-term commitment.
“We wonder why the FSC keeps questioning our commitment, while no other majority shareholders of local insurers have to demonstrate theirs,” Primus Financial said.
Meanwhile, Fubon Financial Holding Co (富邦金控) president Victor Kung (龔天行) said yesterday that the company might consider the possibility of acquiring Nan Shan.
“We would evaluate the possibility of buying any asset at a reasonable price,” Kung told reporters on the sidelines of a financial forum in Taipei.
ADDITIONAL REPORTING BY CNA
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