Nan Shan Life Insurance Co (南山人壽) yesterday won the Taiwan Insurance Guaranty Fund (TIGF, 保險安定基金) bailout auction of troubled Chaoyang Life Insurance Co (朝陽人壽) for NT$200 million (US$6.3 million), allowing Nan Shan to take over Chaoyang’s assets and debts, and retain the rights of existing policyholders unaffected.
It was the second attempt by the semi-official TIGF to sell Chaoyang, which was put under government receivership on Jan. 26 last year and failed to find a buyer at an auction in October last year.
TIFG is to pay Nan Shan the compensation with its own money contributed by insurance companies to support the industry’s smooth operations, TIGF chairman Lin Kuo-bin (林國彬) told reporters.
TIGF has relied on taxpayers’ money to dispose of unprofitable Kuo Hua Life Insurance Co (國華人壽), Singfor Life Insurance Co (幸福人壽) and Global Life Insurance Co (國寶人壽).
Apart from the compensation, the Financial Supervisory Commission will grant Nan Shan amnesties so it can better emerge from Chaoyang’s financial burdens.
Chaoyang had about 100,000 clients with 123,000 policies, total assets of NT$34.52 billion and long-standing negative net worth prior to the receivership that came after the company failed to remedy capital inadequacy, according to the commission.
Insurers with risk-based capital (RBC) ratios of lower than 50 percent might be taken into government control to safeguard the interests of customers and employees, the commission said.
Nan Shan said it is putting together a transition team to carry out the takeover and integration by May 2.
It also has to retain all Chaoyang employees and keep their compensation and benefits unchanged for at least one year, Lin said.
“The deal will enable Chaoyang customers to utilize Nan Shan’s broader and more diversified service network… The company will handle Chaoyang employees in line with contract terms,” Nan Shan said in a statement.
Nan Shan outbid Mercuries Life Insurance Co (三商美邦人壽) and Cathay Life Insurance Co (國泰人壽), though the latter did not participate in the due diligence inspection.
The commission stepped up preferential governance terms to attract buyers this time given that Chaoyang incurs NT$50 million in pre-tax losses a month and tax money is not an option for bailout plans, local media said.
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