British insurer Aviva PLC is considering pulling out of Taiwan and selling its stake in First-Aviva Life Insurance Co (第一英傑華人壽), a joint venture with First Financial Holding Co (第一金控), a local newspaper reported yesterday, citing unnamed sources.
However, First Financial denied the report in a filing with the Taiwan Stock Exchange, while the Financial Supervisory Commission said it had no knowledge of the matter.
The Chinese-language Economic Daily News reported that Aviva intended to bow out because the two-year-old Taiwanese insurer, in which Aviva holds a 49 percent stake, had incurred about NT$700 million (US$21.85 million) in losses and the two partners disagreed over its products and sales strategy.
The newspaper said Aviva had informed the commission of its planned exit by selling its stake, valued at NT$780 million, to an unnamed buyer involved in the life insurance business.
An official from First-Aviva Life, who declined to be named, refused to comment on Aviva’s reported plan to pull out or the estimated share sale value, but he confirmed other parts of the report.
The report said Aviva preferred to promote traditional life insurance and pension products because long-term policies pose a lighter burden on provision reserves. However, First Financial favored selling short-term investment-linked products because they are easier to service and more popular among Taiwanese, the report said.
A majority of Taiwanese, or 53 percent, regularly set aside money for retirement, higher than the global average of 44 percent and the UK’s 36 percent, an Aviva survey in 2008 showed.
However, the same survey indicated that more than 80 percent of Taiwanese preferred short-term savings of less than 10 years to maintain liquidity.
First-Aviva has made use of First Commercial Bank’s (第一銀行) extensive selling network to boost sales. With 189 branches nationwide, the banking unit of First Financial outperformed other state-run peers in promoting insurance products.
First-year premiums reached NT$11.6 billion in 2008, with interest-sensitive annuities and investment-linked policies accounting for a large portion.
Taiwan’s high savings rate and a fast-aging population make it an attractive market for insurance and pension fund investment products.
Bancassurance, in particular, offers great business potential as more than 60 percent of high-income customers, with at least NT$3 million in bank deposits, buy insurance policies from banks.
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