Taiwan Ratings Corp (中華信評) yesterday maintained its credit ratings for Taishin Financial Holding Co (台新金控) after it announced it would acquire Prudential Life Insurance Co of Taiwan (保德信人壽) for NT$5.5 billion (US$186.21 million) in cash.
“We affirm our issuer credit ratings on Taishin Financial and its key subsidiaries with a stable outlook,” in line with expectations of continued strong capitalization at the group and its banking subsidiary, Taishin International Bank (台新銀行), over the next one to two years, said the agency, the local arm of S&P Global Ratings.
Taishin Financial on Tuesday made known its intention to acquire 100 percent equity in Prudential Taiwan, although the deal still needs approval from Taiwan’s regulators.
The bank-focused group can absorb the acquisition given the relatively small transaction value and the small size of Prudential Taiwan compared with Taishin Financial, it said, adding that Prudential Taiwan’s capitalization is weaker than that of Taishin Financial.
Prudential Taiwan would account for about 5 percent of Taishin Financial’s consolidated capital and 8 percent of its total assets based on financial data released last year by the local conglomerate, it said.
“We expect Taishin Financial’s double-leverage ratio to rise, but to remain at a manageable level of about 122 percent following the acquisition,” it said.
A double-leverage ratio represents the parent company’s equity investment in its subsidiaries against total shareholder equity.
The local conglomerate’s credit profile is underpinned by Taishin Bank (台新銀行), which contributes more than 90 percent of the group’s total assets, a dominance that would be sustained after the acquisition, it said.
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