Mercuries Life Insurance Co (三商美邦人壽) shares surged to a seven-month high this week after local media reported that E.Sun Financial Holding Co (玉山金控) had outbid CTBC Financial Holding Co (中信金控) in the financially strained insurer’s ongoing sale process.
Shares of the mid-sized life insurer climbed 5.8 percent this week to NT$6.72, extending a nearly 18 percent rally over the past month, as investors bet on the likelihood of an impending takeover.
The final round of bidding closed on Thursday, marking a critical step in the 32-year-old insurer’s search for a buyer after years of struggling to meet capital adequacy requirements.
Photo: Wu Hsin-tien, Taipei Times
Local media reports said E.Sun’s offer was about NT$8.2 per share, compared with CTBC’s NT$7.6 per share, though neither of the companies have confirmed the details.
CTBC on Thursday said that its board of directors had approved an investment plan without naming the target, fueling speculation that it had submitted a formal bid.
E.Sun has not issued any statement, while Mercuries declined to comment, calling the reports “market rumors.”
If the process proceeds smoothly, the preferred bidder could be announced in the second half of next month, after the parties finalize pricing and obtain board approval, the reports said.
Mercuries Life, which manages about NT$1.5 trillion (US$48.68 billion) of assets and ranks as Taiwan’s seventh-largest life insurer, has failed to meet the statutory 200 percent risk-based capital ratio for seven consecutive reporting periods. Its net-worth ratio also remains below the 3 percent regulatory threshold, leaving it under sustained pressure from the Financial Supervisory Commission.
With Taiwan’s new insurance capital standard set to take effect next year, capital requirements are poised to tighten further and Mercuries Life risks losing operational flexibility under the new framework without a deep-pocketed backer.
The insurer has attempted multiple capital injections and bond issues with limited success, leading to the current sale process — led by Morgan Stanley — to secure a stable strategic investor.
For E.Sun, acquiring Mercuries Life would mark its first major step into the life insurance business, complementing its strength in banking and wealth management. CTBC, already one of Taiwan’s most diversified financial groups, would also benefit from broadening its insurance portfolio.
Mercuries Life is reportedly leaning toward a share-swap deal that would allow it to benefit from the buyer’s long-term growth. Its capital shortfall has depressed its market valuation, making a full cash sale less attractive.
Market watchers say the contest between E.Sun and CTBC underscores the accelerating consolidation in Taiwan’s life insurance sector, as tighter regulations, prolonged low interest rates and the coming shift to Taiwan’s new insurance capital standard push smaller insurers to seek stronger partners.
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