Insurers study possible acquisition of ailing peers
The China Post news staff and CNA
August 14, 2014, 12:01 am TWN
Fubon Financial Holding Co. (富邦金控) and Cathay Financial Holding Co. (國泰金控), two of Taiwan's leading financial institutions, said Wednesday that they will study the feasibility of acquiring two ailing life insurers that were taken over Tuesday by regulators.
Concurrently, Fubon Financial Holding Vice Chairman Richard Tsai (蔡明興) yesterday signed an agreement to confirm the group's surface rights to the coveted A25 land plot in Xinyi District.
Having showed interest in the acquisition of peers, both Fubon Financial and Cathay Financial said they would wait to see the terms offered by financial authorities before looking into the possibility of making a deal for financially troubled Global Life Insurance (全球人壽) and Singfor Life Insurance (幸福人壽).
The two financial holding companies already have life insurance units. Fubon Life Insurance is Fubon Financial's flagship insurance unit, while Cathay Life Insurance is one of Cathay Financial's major sources of income.
The comments came after the Financial Supervisory Commission (FSC, 金融監督管理委員會), Taiwan's top financial regulator, announced Tuesday that it had taken over the two debt-ridden insurers in a bid to prevent their financial conditions from worsening further.
Global Life and Singfor said their operations remained normal Wednesday morning after the takeovers.
It is now planning to hold auctions next year to find suitors for Global Life and Singfor Life.
Analysts cited Mega Financial Holding Co. (兆豐金控), E. Sun Financial Holding Co. (玉山金控) and CTBC Holding Co. (中信金控) as other potential buyers.
The FSC said it made the move because the two life insurers' net worth was continuing to decline after years of losses.
As of the end of the second quarter, Global Life's net worth had fallen to minus NT$25.2 billion (US$840 million), compared with minus NT$23.2 billion recorded at the end of 2013.
Singfor Life's net worth had dropped to minus NT$23.9 billion as of the end of June from minus NT$23.3 billion at the end of last year.
In addition, the risk-based capital (RBC) ratios of Global Life and Singfor Life were lower than the minimum 200 percent required by the Insurance Act, the FSC said, but it declined to disclose the two insurers' RBC ratios.