TAIWAN ASKS AIG TO KEEP NAN SHAN LIFE INSURANCE ON LIFE SUPPORT

Taiwan’s financial Supervisory Commission (FSC) has asked the American International Group, Inc. (AIG) to keep running its Taiwan subsidy, Nan Shan life insurance Co., after the Taiwan Ministry of Economic Affairs nixed a bid by Hong Kong-based Primus financial Holdings Ltd. to acquire it.

FSC vice chairman Wu Tang-chieh said the commission will negotiate with AIG with an eye to persuading the group to keep its stake in Nan Shan and run it for the best interests of Nan Shan.

“We would like to talk with AIG on any proposal it might come up with for Nan Shan, as long as it is helpful for the insurance company’s future development,” Wu said.

However, he admitted, much as the commission would like AIG to keep Nan Shan, it cannot stop AIG from selling, as long as AIG can find a buyer suitable for the best interests of AIG, Nan Shan, its customers and employees.

Noting that Nan Shan is a significant domestic insurance company, Huang Tien-mu, an FSC official in charge of insurance business, said his office will keep a close eye on any transfer of Nan Shan’s ownership.

AIG, which received billions of dollars in a bailout from the U.S. government to tide it over the global financial crisis in 2008, decided that same year to shed assets worldwide to streamline its operations.

It agreed to sell Nan Shan for US$2.15 billion to Primus Financial and China Strategic Holdings (SEHK:0235) on October 13, 2009.

However, the deal was rejected Tuesday by the Investment Commission under the Ministry of Economic Affairs out of concerns over the new owners’ ability to increase capital in the future and its lack of experience in life insurance.

Founded in 1963, Nan Shan has some four million policy holders and NT$1.73 trillion (US$54 billion) worth of gross assets, accounting for 15.32 per cent of Taiwan’s overall insurance sector.

The insurance company has a net assets of NT$140.3 billion, exceeding 30 per cent of the total in Taiwan’s overall insurance industry.