TAIPEI (Dow Jones) – American International Group Inc. (AIG) is signing a deal to sell its Taiwan life insurance unit, Nan Shan Life Insurance Co. to Taiwan's Ruentex Group, for slightly above US$2.15 billion, as the US insurer struggles to repay funds it received through a US government bailout during the financial crisis.
In a surprise move, AIG picked supermarkets-to-cement conglomerate Ruentex as the preferred bidder for Nan Shan Life, passing over rival bids from financial holding companies, two people familiar with the deal said Wednesday. This is the US insurer's second attempt at selling the Taiwan life company after a previous deal to Hong Kong-based buyers, worth US$2.15 billion, was blocked by regulators.
The people said that AIG will announce its decision later Wednesday in Taipei, and will sign the deal in the next few hours. They noted, however, that the deal still awaits approval from Taiwan's Financial Supervisory Commission.
Ruentex's lack of significant experience in operating an insurance company could again raise concerns from Taiwan's financial regulator, which blocked the deal by a consortium comprising Primus Financial Holdings Ltd. and Hong Kong-listed China Strategic Holdings Ltd. in August last year. The regulator cited concerns about China Strategic's financial strength and commitment to Nan Shan as reasons behind turning down the Hong Kong deal.
"It's a surprising outcome," said Sam Radwan, managing partner of Enhance International, a consultant focused on insurance in Taiwan and mainland China. "The FSC has always been clear as to what their requirements are."
The FSC has said its approval of a potential deal will depend on whether a buyer has sound financing and insurance experience, will look after policyholders and staff, and make a long-term commitment to the company, and can meet future funding needs.
