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TRADE FINANCE | Tony Chua, Taiwan

Taiwan gives nod to sell AIG life unit

Taiwan’s regulator approved Ruenchen $2.16bn bid for AIG the unit after rejecting 11 months ago.

Taiwan's financial regulator approved the $2.16 billion sale of American International Group Inc.'s Taiwan life-insurance unit to Ruenchen Investment Holdings Ltd., marking an end to a sale process that has dragged on for almost two years.

AIG put Nan Shan Life Insurance Co. on the market 20 months ago, as part of its effort to repay its bailout from the U.S. government during the financial crisis. An initial sale to a consortium comprising Primus Financial Holdings Ltd. and Hong Kong-listed China Strategic Holdings Ltd. for US$2.15 billion was rejected 11 months ago by regulators, who said the buyer lacked financial strength and a commitment to Nan Shan.

AIG in January picked Ruenchen, a unit of unlisted Taiwan cement-to-footwear Ruentex Group, following a new round of bids.

On Thursday, Taiwan's Financial Supervisory Commission said it had approved the Ruenchen bid, noting in a statement that the company has placed 30 billion New Taiwan dollars (US$1.04 billion) in cash into a custodial account, as requested earlier by the regulator, to show it has the financial means to run the insurer.

It also said Ruenchen has agreed to other conditions, including keeping its debt-to-capital ratio below 48%, placing all its shares in Nan Shan in a trust for 10 years to ensure its "long-term commitment" to the insurer, and placing 70% of the shares in Ruenchen Investment in a trust for 10 years.

Nan Shan, which has about a 30% market share in Taiwan's life-insurance market, and Ruenchen couldn't be reached for comment.

View the full story in The Wall Street Journal.

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