The Financial Supervisory Commission (FSC) has approved Taishin Financial Holding Co’s (台新金控) application to acquire Prudential Life Insurance Co of Taiwan (保德信人壽), after it committed to selling all of its shares in Chang Hwa Bank (CHB, 彰化銀行) to fund the acquisition and to inject capital into the life insurer, the commission said yesterday.
Taishin Financial later announced that it would sell its CHB shares within six years and would not nominate new CHB board members or exercise its voting rights in the state-run bank’s board elections, ending its decades-long management dispute with the Ministry of Finance.
The commission told a videoconference that it approved the deal on Monday on two conditions: Taishin Financial must place all of its CHB shares in custody and it must meet Prudential Life Taiwan’s capital needs over the next decade, as the life insurer would need more capital to meet stricter solvency rules that are to take effect in Taiwan from 2026.
Photo: Kelson Wang, Taipei Times
Taishin Financial should have enough money to support the insurer as it has committed to operating it for a long time, Insurance Bureau Deputy Director-General Chang Yu-hui (張玉輝) said.
The commission did not set a minimum for how long Taishin Financial’s custodial arrangement should last, but it should match the firm’s capital injection plan for the life insurer, Banking Bureau Chief Secretary Phil Tong (童政彰) said.
The commission has reviewed Taishin Financial’s financial profile, and believes the firm’s financial strength should remain sound over the next three years, Tong said.
Taishin Financial’s capital adequacy ratio was 130 percent as of the end of last year, higher than the regulatory minimum of 100 percent, while its double leverage ratio was 118.17 percent, lower than the ceiling of 125 percent, he said.
The firm plans to complete the acquisition on July 1, Chang said, adding that it would use its own money to finance half of the NT$5.5 billion (US$199 million) deal and acquire the other half through loans.
Taishin Financial has promised to retain all Prudential Life Taiwan employees and protect policyholders’ rights, he said, adding that the firm’s board members must endorse its commitments before obtaining formal approval from the FSC.
Taishin Financial president Welch Lin (林維俊) said that the firm would dispose of its CHB shares by selling some directly on the market — including via after-hour trading and block trades — by issuing exchangeable bonds or by issuing class F preferred stocks, with the ratios of shares sold under the latter two methods being not more than one-third each.
The company has not finalized how much money it would need to inject into Prudential Life Taiwan, as it would depend on actuarial standards that have not yet been announced by the FSC, but the “money generated from the sales of our CHB shares should be more than what is needed,” Lin said.
Prudential Life Taiwan would be renamed, he said, adding that Taishin Financial’s appointment of a new management team at the insurer has been accepted by the commission.
This story has been modified since it was first published, which incorrectly stated that Taishin Financial Holding Co’s appointment of a new management team at Prudential Life Insurance Co of Taiwan has not been approved by the Financial Supervisory Commission.
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