Taiwan's China Life will buy the bulk of British insurer Prudential Plc's business in Taiwan, in the latest pullback by a foreign insurer from the island, the companies said.
Prudential will get about 10% of China Life in exchange for the bulk of its PCA Life Assurance Co unit, said China Life, which would issue 145.5 million new shares and sell them to Prudential for T$15 per share, valuing the stake Prudential will get at T$2.18 billion ($64 million).
Under the deal, China Life will take over most of Prudential's Taiwan insurance business, but the British company will retain its banking channels and telemarketing business.
“Taiwan is the best place in Asia to do business for insurance companies, and we'll continue to be here,” said Barry Stowe, chief executive of Prudential Asia.
The sale by Prudential, the No.2 British insurer, comes as big global giants are trying to raise cash to shore up their positions at home amid the global financial storm.
ING Groep recently closed the US$600 million sale of its Taiwan insurance unit to Fubon Financial, four months after announcing the deal.
Dutch insurer Aegon is also planning to dispose its Taiwan unit for an initial asking price of T$4 billion, according to local media reports.
And AIG is also trying to find a bidder for its Taiwan life insurance business, Nan Shan Life, though sources have said potential buyers consider the asking price was too high.
Prudential, with a 2.76% share by total premium in the Taiwan market, posted losses there in three of the four years since 2005.
The firm had a T$4.0 billion net loss in the nine months to last September, following a loss of T$3.1 billion in 2007 and a T$882 million loss in 2005. It posted a T$2.2 billion net profit in 2006, according to the website of its Taiwan unit. (Reuters)