Prudential Corp Plc, Britain's largest insurer, said it will pay up to NT$3.35 billion for control of ChinFon Life Insurance Co (
Prudential said it will pay NT$1.1 billion for a 57.8 percent stake in the company. It will also pay as much as NT$2.24 billion to buy new shares that ChinFon plans to offer to its shareholders next month.
The Ministry of Finance has told ChinFon, which lost NT$2.26 billion last year, that it needs to raise NT$2.8 billion by Oct. 14 as part of a recapitalization plan to strengthen its finances and offset last year's losses.
Prudential's bid comes two months after it scrapped plans to pay NT3.2 billion for 87 percent of Hung Fu Life Insurance.
After buying ChinFon, Prudential is likely to withdraw an earlier application for its own life insurance license in Taiwan.
"Prudential will have an instant access to Taiwan's life insurance market," said Gary Lu, a ChinFon spokesman.
Prudential will compete with 31 other life insurance companies in Taiwan, including 15 foreign firms. Life insurers in Taiwan collected NT$48.9 billion in premiums last year, a 15.8 percent increase from a year earlier.
The joint venture will give Prudential "a strong presence in this rapidly growing market," Prudential Chief Executive Mark Tucker said in a statement.
Established in 1960 as the first privately owned life insurer in Taiwan, ChinFon Life is 75 percent-owned by the ChinFon Group, which also controls listed motorcycle maker Sanyang Industrial Co Ltd and unlisted ChinFon Commercial Bank.
Prudential said ChinFon has more than 250,000 customers and posts annual premiums of NT$2.6 billion. At the end of last year, it had total assets of NT$12.4 billion.
ChinFon Life said it has 2,660 employees, including 2,200 agents.
The government is expected to approve Prudential's acquisition, said Chen Kai-yuan, section chief of the ministry's insurance department. "A merger with one of the world's leading insurers will help ChinFon," he said
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