MassMutual International Holdings MSC Inc, a leading US insurance firm, has decided to pull out of Taiwan by selling its stake in a local insurer to its Taiwanese partner, which plans to take the company public.
On Thursday, the board of Mercuries & Associates Ltd (三商行), which operates a department store chain and other businesses in Taiwan, approved the purchase of MassMutual International’s 27.93 percent stake in MassMutual Mercuries Life Insurance Co (三商美邦人壽保險) for US$68.02 million.
Mercuries’ affiliates will acquire the remaining 11.08 percent stake for US$27 million, Mercuries said in a statement.
US requirements
“MassMutual International wanted out, probably to raise funds to meet new US accounting requirements,” Edward Pu (蒲中敏), the local insurer’s spokesman, said by telephone.
The global financial crisis has prompted major US firms to adopt a more conservative strategy and the Massachusetts-based firm likely considered it better to divest its stake in Taiwan, Pu said.
American International Group Inc and MetLife Inc have sought unsuccessfully to sell their Taiwanese units because the financial regulator, the Financial Supervisory Commission, had found their prospective buyers to be ill-equipped, financially and professionally, to run life insurance firms.
MassMutual Mercuries Life posted a net profit of NT$492.15 million (US$15.98 million) in the first half, or earnings per share of NT$0.60, down 35 percent from last year, according to its filing with the Taiwan Stock Exchange.
The insurer, the sixth largest by market share, has 12,000 sales representatives and 1.6 million policyholders, company data show.
The US$95 million deal, due to be completed in the first quarter of next year, will put an end to the decade-long partnership between MassMutual International and Mercuries & Associates.
IPO
Mercuries acting spokesman T. K. Chin (陳德開) said the company planned to carry out an initial public offering of MassMutual Mercuries Life in a year or 18 months.
Unlike foreign insurers, Mercuries is optimistic about the life insurer’s outlook as the economy recovers and given improving cross-strait ties, Chin said.
Hontai Life Insurance Co (宏泰人壽), another local insurer, appear to share the optimism and visited MetLife Taiwan (大都會人壽) last week for acquisition talks, local media reported yesterday.
Hontai reportedly planned to buy the unit last year but lost the bid to Waterland Financial Holding Co (國票金控) because the latter offered to pay in cash.
MetLife Taiwan declined to comment, saying the US parent has not decided whether to put it on the market again.
Taiwan’s life insurers are likely to see their earnings fluctuate over the coming one to two years due to the unstable recovery in global capital markets, Taiwan Ratings Corp (中華信評) said in a recent statement.
The sharp gain in the local currency may add to the volatility, it said.
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