Lawmakers from across party lines yesterday urged the Financial Supervisory Commission (FSC) to reject the planned acquisition of Nan Shan Life Insurance Co (南山人壽) by a local consortium because of concerns about the major shareholder.
Questions were raised as the financial regulator mulled its decision on the latest share transfer plan after blocking the first attempted sale of the insurer in August last year on concerns about the would-be buyer’s long-term commitment and ability to increase capital.
Chinese Nationalist Party (KMT) Legislator Lo Shu-lei (羅淑蕾) said the commission should reveal how the new buyer group, Ruen Chen Investment Holding Co (潤成投資), met the escrow fund requirement.
Ruen Chen inked an agreement with US insurance giant American International Group Inc in January to buy AIG’s 97.57 percent stake in Nan Shan for US$2.16 billion in cash. Ruen Chen is 80 percent owned by the Ruentex Group (潤泰集團), with the remaining 20 percent held by Pou Chen Corp (寶成工業), a local footwear maker.
The commission asked Ruen Chen to demonstrate its financial clout by setting up a NT$30 billion (US$1.04 billion) escrow fund with cash or equivalent assets at an approved bank.
The commission recently said Ruen Chen filed extra documents as instructed, without elaborating. Financial Supervisory Commission Chairman Chen Yuh-chang (陳裕璋) said earlier that the agency would reach a decision in the first half of this year.
“If Ruen Chen created the escrow fund with borrowed money, the fee and interest expenses will put pressure on its finances later,” Lo told a public hearing yesterday.
The group could then channel Nan Shan’s funds to cover its bank loans, straining the insurer’s financial health and endangering the rights of employees and policyholders, Lo said.
Nan Shan Life, a local unit of AIG, has about 40,000 employees and 4 million policyholders.
Non-Partisan Solidarity Union Legislator Kang Shih-ju (康世儒) questioned the honesty of Ruentex Group chairman Samuel Yin (尹衍樑), saying Yin holds US citizenship and was involved in financial scandals involving former KMT treasurer Liu Tai-ying (劉泰英).
“The commission should add an honesty test to its review and stand by the principle of industry and financial sector separation,” Kang said.
The commission should suspend the review until Yin is given the opportunity to prove his character is beyond reproach, Kang said.
Democratic Progressive Party Legislator Su Chen-ching (蘇震清) voiced concern about the possible involvement of Chinese capital in because both Ruentex and Pouchen have businesses in China.
The commission has said it would ensure any buyers are committed to the company long-term, are professionally competent and have sufficient funding to meet future capital needs. In addition, Ruen Chen must also pledge to safeguard the rights of existing employees and policyholders and follow rules regarding capital sourcing.
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