(L-R) AIG's Chief Operating Officer Richard L. Bender, Nan Shan Life Insurance Chairman Edmund Tse, Primus Financial Holdings Managing Director, Chairman and Co-Chief Executive Officer Robert Morse and Frank Chen, NSLI's President and CEO, pose for the press during a press conference in Taipei yesterday to announce the sale of AIG's stake in Nan Shan Life. AFP

TAIPEI: The American International Group Inc (AIG) has agreed to sell its 97.57 percent controlling stake of its Taiwan unit, Nan Shan Life Insurance Co, to a consortium led by Hong Kong-based Primus Financial Holdings for $2.15 billion (NT$69.3 billion), the companies announced yesterday.

The transaction is subject to the satisfaction of certain conditions, including getting regulatory approval.

In acquiring Nan Shan, the Primus Financial consortium has agreed to maintain the Nan Shan brand, the existing compensation and benefits package for employees and the existing agency organizational and commission structure for a minimum of two years after the transaction is completed, AIG said in a statement. The current Nan Shan management team will remain in place, it added.

"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 Robert Benmosche, AIG chief executive officer.

Primus Financial Managing Director, Chairman and Co-Chief Executive Officer Robert Morse said they wanted to develop Nan Shan as a Taiwan-based pan-Asia financial services firm.

Primus, established in April 2009 with capital in excess of $1 billion, is one of four consortiums that vied to acquire Nan Shan in an open bid on August 28. The others are Cathay Financial, Fubon Financial and Chinatrust Financial, all Taiwan-based companies. Primus and Chinatrust were most keen to acquire Nan Shan Life, according to industry sources.

Established in 1963, Nan Shan is the largest life insurer in Taiwan by total book value and the third largest by total premiums, serving four million policyholders via an extensive network of 24 branches, 450 agency offices, approximately 4,000 employees and more than 34,000 agents.

Financial Supervisory Commission (FSC) Chairman Sean C. Chen said yesterday that if Primus is funded by non-Hong Kong capital, the transaction will be examined first by the Investment Commission of the economic affairs authorities, and then sent to the FSC for final approval.

The FSC laid down several conditions for bidders for Nan Shan Life, including a commitment to keep the company for at least seven years and to protect the interests of its employees and policy holders.

Some DPP legislators expressed concern last month over the bid by Primus Financial, saying that the company is financed by mainland capital and has close ties to Beijing. They threatened to ask the Control Yuan to investigate the FSC's legal liability if it failed to prevent Primus from acquiring Nan Shan.

According to Taiwan law, companies with mainland funding are not allowed to invest in Taiwan's financial institutions, including insurance companies.

AIG said Blackstone Advisory Partners and Morgan Stanley acted as financial advisors and Debevoise & Plimpton LLP and Lee & Li, Attorneys-At-Law served as its legal advisors in the transaction.

New York-based AIG was hit by a financial crisis last October and was forced to shed Nan Shan to ease its own financial burdens. AIG announced in early August that it would sell its 97.57 percent stake of its Taiwanese unit.

China Daily/CNA

(HK Edition 10/14/2009 page2)