The Financial Supervisory Commission (FSC) yesterday demanded that Nan Shan Life Insurance Co (南山人壽) explain punishment it meted out to senior managers based on a request from a major shareholder, saying that the decision hurt the firm’s corporate governance.
The insurer on Saturday last week announced that it was handing demerits to vice chairman Yin Chung-yao (尹崇堯) and general manager Hsu Miao-chiu (許妙靜) at the request of board member Samuel Yin (尹衍樑), chairman of Ruentex Group (潤泰集團) and Yin Chung-yao’s father.
Samuel Yin asked for the penalty after Nan Shan posted full-year revenue for last year that saw it fall to third place among local peers, the Chinese-language Commercial Times reported, citing an official document sent in the name of Yin Chung-Yao.
Nan Shan was last year expected to surpass Cathay Life Insurance Co (國泰人壽) in terms of full-year sales, but it was barred by the commission from selling investment-linked policies due to problems found in its new “Envision Project” information technology system, which negatively affected its business, the newspaper said.
Nan Shan’s first-year premiums last year totaled NT$164 billion (US$5.4 billion), lagging behind Fubon Life Insurance Co’s (富邦人壽) NT$206 billion and Cathay Life’s NT$201 billion, commission data showed.
“The decision to impose the punishment was neither discussed in a board meeting nor made in line with internal control regulations,” FSC Insurance Bureau Chief Secretary Lin Yao-tung (林耀東) told a news conference in New Taipei City.
Companies can explain to major shareholders why their sales have declined, but they should not make major decisions based on the opinion of a single board member without holding a board meeting, the bureau said.
“Nan Shan later told us that the punishment should be invalidated and that it would revoke the penalties,” Lin said.
The company needs to provide further explanation before Friday, he said.
Nan Shan yesterday said that it would soon clarify the incident with the regulator.
Nan Shan’s first-year premiums last month declined 36 percent year-on-year to NT$12.81 billion, company data showed.
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