March 20, 2006
American International Group announced in mid February that an agreement has been reached in which its wholly-owned Taiwanese subsidiary AIG Direct Marketing Co. will purchase via a stock swap a controlling share in Taiwan's Central Insurance Co. The
NTD 6 billion deal marks the first instance of a foreign firm buying a stock market-listed financial institution in Taiwan.
Central Insurance is presently Taiwan's sixth largest non-life insurer, while AIG is the largest insurance company by market value in the world. The combination of AIG's Taiwan-based insurance operations with those of Central Insurance will create the third largest insurer in Taiwan, with total premiums of
NTD 10 billion annually.
Taiwan's Polaris Financial Group and Nice Enterprise hold 37% and 15% stakes respectively in Central Insurance. Polaris and AIG plan to cooperate closely on the development of Central Insurance's property insurance operations.
Central Insurance currently operates 40 business units in Taiwan and has two representative offices in China. AIG has long been a major insurer in Asia. In addition to expanding the US insurer's presence in Taiwan, the deal will also allow AIG to make deeper inroads into China's insurance market.
This deal will be presented to Central Insurance shareholders in early April, and the stock swap is slated to take place in the third quarter.
AIG acquired a controlling stake in Taiwan's Nan Shan Life Insurance in 1996.
(United Daily News, Reuters)
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