The Financial Supervisory Commission yesterday said it respects the decision of British insurer Aviva PLC to pull out of Taiwan and sell its stake in a locally based joint venture.
The regulator’s comments came after state-run First Financial Holdings Co (第一金控) announced its decision to purchase a 49 percent stake in joint venture First-Aviva Life Insurance Co (第一英傑華人壽) from its British partner at a symbolic cost of US$1.
“We acknowledge and respect Aviva’s strategy to focus on markets that are larger and where it can leverage its competitive advantage,” Insurance Bureau Deputy Director-General Tsai Li-ling (蔡麗玲) said.
The commission had not deterred Aviva’s past attempts to leave Taiwan in 2010 and 2012, Tsai said, adding that no applications had been sent to the commission.
However, Taiwan is among many markets that the insurer has left behind, including South Korea, Malaysia, Sri Lanka and Russia, she said.
New York Life Insurance Co in March was the most recent insurer to leave Taiwan, Tsai said, adding that New York Life’s local subsidiary had been acquired by Yuanta Financial Holding Co (元大金控).
First-Aviva Life has been troubled since its founding in 2008 and has continued to rack up losses.
In the first half of this year, First-Aviva Life’s accumulated losses were NT$57.72 million (US$1.91 million), while its total premium revenue was tallied at NT$5.6 billion, commission data showed.
The joint venture had about 74,000 policies in force, and its risk-based capital reading was 260 percent, the data showed.
Aviva’s expertise in pension planning and annuity products were ill-suited to Taiwan’s crowded market, where customers prefer endowment insurance products, First Financial’s strategy and planning division deputy head Annie Lee (李淑玲) said.
In particular, following the implementation of the Solvency II directive in Aviva’s home market of the EU, it has been facing more stringent capital requirements for selling endowment products at its overseas operations, which has compelled the company to cut its global footprint, Lee said.
“We remain optimistic about Taiwan’s insurance market in light of opportunities regarding the aging population and the rising demand for retirement planning,” Lee said.
First Financial is committed to ensuring that the interests of its 60,000 policy holders are not affected by the ownership change, she said.
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