AIG Taiwan Life Insurance Unit Sold
After almost two years, American International Group (AIG) Inc's Taiwan life insurance unit has been sold to Ruenchen Investment Holdings, LTD. The sale has been approved by Taiwan's financial regulator and was sold for $2.16 billion according to the article "Taiwan Approves AIG Sale of Life Unit" by Fanny Liu and Paul Mozur on the Wall Street Journal online.
Nan Shan Life Insurance from AIG was put on the market approximately 20 months ago in a plan to repay some bailout money from the US government which took place during the economic crisis. In January, AIG went with Ruenchen which is a unit of Taiwan cement-to-footwear Ruentex Group, as the potential buyer. As of this week, Taiwan's Financial Supervisory Commission approved the bid from Ruenchen after they proved they had the financial means to make the deal work.
Ruenchen has agreed to other conditions put forth by regulators such as keeping its debt-to-capital ratio under 48% and placing their Nan Shan shares in a trust for the next decade to ensure they have a long term commitment to the insurance company. They are also placing 70% of the shares in Ruenchen Investment in a trust for a decade as well. Currently, Nan Shan Insurance is about 30% of Tawain's life insurance market so it's a major acquisition for Ruenchen.
Ruenchen was criticized by some as having a lack of life insurance experience, but Ruentex companies did purchase a 20% stake in ING Groep NV's life insurance unit in Taiwan back in 1986, but the holding was sold back to ING in 2001 so it's been ten years since they have been in the industry. Despite this, regulators have approved the purchase and things are moving forward which is good progress for AIG as well as Ruenchen.