Hotai Motor Co (和泰汽車), the nation’s leading car dealer, yesterday announced that its board of directors has approved plans to acquire a 99.73 percent stake in Zurich Insurance (Taiwan) Ltd (蘇黎世產險) for NT$6.4 billion (US$197.62 million).
The deal is to be conducted through a wholly owned subsidiary, He-zan Investment Corp (和展投資), Hotai told a press conference at the Taiwan Stock Exchange after the stock market closed.
The company plans to first inject NT$6.9 billion in cash to He-zan Investment to help fund the stake acquisition, Hotai said.
Pending regulatory approval, the deal is expected to be completed on Jan. 1 next year, Hotai said.
“We expect the expansion into the insurance segment to generate long-term growth momentum by providing customers with a full line of automobile-related products and services,” Hotai spokesman Fred Hsieh (謝富來) said.
“In addition, we aim to expand our new venture into a full-fledged general insurance company, offering comprehensive products including personal and commercial policies, as well as car insurance,” Hsieh said.
Although the company has collaborations with local leading general insurers, it aims to increase the proportion of car insurance policies sold by its own affiliates to higher than 50 percent, he said.
Hsieh said that Hotai, which operates Toyota and Lexus dealerships in the nation, hopes to snap up 15 percent of the local car insurance market, aided by its steady one-third share of the local car market.
In the first five months of the year, Hotai sold 55,694 cars in Taiwan, with a market share of 31 percent, according to data compiled by local motor vehicle offices released earlier this month.
Expanding beyond car insurance will allow its new venture to diversify premium streams and reduce operating risks, Hsieh said, adding that Hotai’s earnings and debt utilization have remained on track.
Zurich Insurance holds a 1.47 percent market share of Taiwan’s car insurance market, and the interest of its 700 employees and current policy holders will be preserved following the completion of the deal, Hsieh said.
However, the deal would mark the exit of the Swiss insurer from the local market.
Financial Supervisory Commission Vice Chairman Kuei Hsien-nung (桂先農) said that financial regulators are not especially concerned about the business strategy of foreign insurance companies, while the commission’s Insurance Bureau said that the Swiss insurer had already pulled out from Singapore and the Middle East.
Hotai Motor’s current affiliates include Ho-an Insurance Agency Co (和安保險代理人), company data showed.
Meanwhile, Tokio Marine Newa Insurance Corp (新安東京海上產險), which is 51 percent owned by Yulon Motor Co (裕隆汽車), derives 30 percent of its auto insurance sales from its major stakeholder, company data showed.
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