Tuesday, August 31, 2010

Taiwan rejects Hong Kong group's bid for AIG unit

Taiwanese authorities on Tuesday rejected a Hong Kong consortium's bid to buy ailing US insurance giant American International Group's Taiwan unit Nan Shan Life.

The application by Hong Kong-based China Strategic Holdings and Primus Financial Holdings "has failed to get the approval of the responsible authorities," the Investment Commission said in a statement.

Rejection of the bid will come as a blow to AIG, once the world's largest insurer, which has been selling assets to pay back US government loans since its rescue from collapse during the 2008 financial crisis.

The Hong Kong bidder is allowed to file an appeal within 30 days but analysts were not optimistic on the prospects for the deal.

"Even if China Strategic Holdings and Primus Financial Holdings appeal, the odds of success are slim," said Mars Hsu of Grand Cathay Securities.

Concerns that the Hong Kong consortium is short of experience to manage an insurer and its failure to provide a long-term management commitment were the main reasons that prompted the Financial Supervisory Commission -- the regulators that oversee Taiwan's insurance industry -- to block the deal.

"The decision has nothing to do with concerns that some shareholders of the consortium have Chinese capital," said Fan Liang-tung, executive secretary of the Investment Commission.

The Hong Kong consortium agreed to acquire Nan Shan Life from AIG for 2.15 billion US dollars in October last year, but the deal has been in limbo since November when China Strategic announced a plan to sell a 30 percent stake in Nan Shan to Taipei-based Chinatrust Financial Holding Co.

Rumours also surfaced late last year that Chinese capital was involved in the deal -- claims that the consortium has repeatedly denied.

Taiwan has partially lifted a decade-old ban on Chinese investment amid improving ties after President Ma Ying-jeou took office in 2008 on a China-friendly platform.

However, the government still imposes various restrictions in key sectors such as finance, flat-panel technology and telecommunications as it seeks to keep control of its economy.

Nan Shan Life was established in 1963, and now has a network of 24 branches and 450 agency offices, employing a staff of 4,000 and more than 34,000 agents.

As of September 2009, it had four million customers.

No comments:

Post a Comment