US insurance giant AIG, short of cash to repay a government bailout, said Wednesday it would sell its Taiwan unit to a consortium led by one of the island’s biggest conglomerates for $2.16 billion.
AIG, which is now controlled by the US government, said in a statement that it had agreed to sell Nan Shan Life to Ruen Chen, a group led by Ruentex, after it expressed a long-term commitment to the company.
“Ruen Chen offers strong operational and funding capabilities and possesses a clear ability to satisfy the strict criteria that governed AIG’s bid review process,” said AIG president Robert Benmosche.
However, analysts pointed out the price of the proposed acquisition was significantly lower than some of the numbers floated in the local media in recent weeks.
“From the buyer’s point of view it’s a good bargain,” said Chen Yu-yu, a Taipei-based analyst with Capital Securities.
Taiwan’s Chinatrust Financial had offered $3 billion for Nan Shan, a local lawmaker with ties to the US Treasury said late last month.
The US government is trying to exit its majority stake in AIG and recoup public aid.
Taiwan’s industry regulator, the Financial Supervisory Commission, has said it will only accept a deal if the buyer of Nan Shan meets certain requirements, including professional management capability and long-term commitment.
“I think the government would feel comfortable if Nan Shan can be sold to a local buyer,” said Mars Hsu, an analyst with Grand Cathay Securities in Taipei.
Another factor likely to reassure officials at the Financial Supervisory Commission is the long-standing amiable ties between Samuel Yin, head of the Ruentex Group, and Taiwan’s ruling Kuomintang party, Hsu said.
Wednesday’s deal, which is still subject to Taiwanese government approval, could bring an end to a lengthy quest for a buyer for Nan Shan.
AIG sold Nan Shan Life to a consortium led by Hong Kong-based Primus Financial Holdings for $2.15 billion in 2009, but the deal was rejected by the Taiwanese financial regulator last year.
Taiwanese authorities said they feared the Hong Kong group lacked the experience needed to manage an insurer and argued it had failed to provide a long-term management commitment, claims rejected by the consortium.
The rejection of the bid came as a blow to AIG, once the world’s largest insurer, which has been selling assets to pay back US government loans since its rescue from collapse during the 2008 financial crisis.
Ruentex is a sprawling conglomerate with interests in sectors as diverse as construction, textile and finance.
Taipei, Jan 12, 2011 (AFP)
