Primus wins $2.15bn AIG Taiwan life unit
Hong Kong-based investment company Primus Financial Holdings headed the consortium that won the battle to acquire American International Group (AIG)'s Taiwanese life insurance unit, Nan Shan, for $2.15bn.
Primus and fellow Hong Kong investment firm China Strategic Holdings won the bid for AIG's 97.5 percent-owned Nan Shan Life Insurance Co - which is not part of the insurance giant's flagship American International Assurance (AIA) unit in the region.
AIG will book a technical loss of $1.4bn on the sale. In a statement it said it expects the deal to meet the criteria for "held-for-sale" accounting and will consequently recognise a loss of approximately $1.4bn net of taxes in the fourth quarter of 2009.
Despite the accounting loss it is the largest sale of an AIG asset so far, as it gathers funds to repay the billions of dollars in bailouts it has received from the US government.
"We are pleased to have found a buyer who shares our confidence in Nan Shan's bright future, and who has pledged to continue Nan Shan's commitment to its policyholders, agents and employees, as well as to the people of Taiwan," said AIG CEO Robert Benmosche.
Securing Taiwan's third-largest insurer is a significant achievement for Primus, which was only set up in May by a trio of former Citigroup Asia executives, led by the bank's former head in the region, Robert Morse.
Under the deal, Nan Shan will retain its brand, existing employee compensation and benefits package and organisational and commission structure for a minimum of two years after the transaction closes. The current Nan Shan management team will remain in place.
Founded in 1963, Nan Shan is the largest life insurer in Taiwan by total book value, with total assets exceeding US$46bn and 7.9 million in-force policies, held by approximately four million policyholders.
Morse, the chairman and co-chief executive of Primus Financial and vice chairman of China Strategic, said: "We aim to develop Nan Shan into a leading Taiwan-based, pan-Asian financial services company, and Nan Shan's management team, agents and employees are an integral part of this vision. We also believe that a strong and competitive Nan Shan is important for the overall Taiwanese financial landscape."
The deal is subject to satisfying certain conditions, including regulatory approval. AIG will post a loss of about $1.4bn from the deal.
The $2.15bn price tag puts Nan Shan ahead of the $1.9bn disposal achieved by AIG for selling its 21st Century Insurance motor insurance subsidiary to Farmers Group in July. The Zurich Financial Services subsidiary also assumed $100mn of debt.
In August, AIG sealed another major transaction by selling energy and infrastructure assets in four transactions to undisclosed buyers (that included Sumitomo Corporation) for $1.9bn.
The news comes after US public spending watchdog the Government Accountability Office (GAO) cast doubt over AIG's ability to repay the outstanding $83.6bn debt and equity balance on its $182bn bailout package.
In a report last month, the GAO said the fallen insurance giant is showing signs of stabilising, but that it is too early to tell whether AIG's plans to restructure its business and repay the government will bear fruit.