AIG Reaches Deal to Sell Taiwan Life Unit Nan Shan

By Iris Lai
Hong Kong bureau manager
A.M. Best Company, Inc.
January 12, 2011

American International Group Inc. has agreed to sell its Taiwanese life subsidiary, Nan Shan Life Insurance Co. Ltd., for US$2.16 billion in cash to a Taiwanese consortium led by industrial conglomerate Ruentex Group.

AIG has agreed to sell a 97.57% stake of its Taiwanese life unit to Ruen Chen Investment Holding Co. Ltd., which was formed to bid for Nan Shan. The investment group is 80% owned by Taiwan-based Ruentex Group and 20% by Taiwanese footwear manufacturer Pou Chen Corp. Ruentex and Pou Chen currently have no insurance operations.

The transaction is subject to regulatory approval.

"The participants in the consortium enjoy an excellent reputation in Taiwan. Ruen Chen offers strong operational and funding capabilities and possesses a clear ability to satisfy the strict criteria that governed AIG's bid review process," said Robert Benmosche , president and chief executive officer of AIG, in a statement. "Consistent with these criteria, Ruen Chen has demonstrated that it is able and willing to invest in Nan Shan's future, and that will protect and serve the best interests of Nan Shan's policyholders, employees and agents."

Ruen Chan has expressed its intention to retain Nan Shan's management team, as well as its long-term commitment to maintain both its majority ownership in Nan Shan and the Nan Shan brand, according to AIG. The purchase agreement includes commitments for employees and agents protections and retain of existing compensation and benefit package, agency and commission structure.

Established in 1963, Nan Shan has a network of 24 branches, about 4,100 employes and more than 33,000 agents in Taiwan.

AIG's first proposed sale of Nan Shan to a Hong Kong-based consortium comprised of China Strategic Holdings Ltd. and Primus Financial Holdings, which jointly won an earlier bidding round to acquire a 97.57% stake in Nan Shan for US$2.15 billion. That deal was rejected by Taiwan's regulator amid concerns that the buyers were backed by capital from mainland China and lacked experience in the insurance business and the ability to raise funds for future operations.

Last December, AIG attracted four Taiwanese financial and business conglomerates for a new round of acquisition bid for Nan Shan. The four companies expressing interest in Nan Shan were Chinatrust Financial Holding Co., Cathay Financial Holding Co., Ruentex and Fubon Financial Holding Co. Ltd.

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