Taiwan Watchdog Nixes Sale of AIG Unit

August 31, 2010 at 08:00 PM
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A regulatory body in Taiwan has rejected American International Group Inc.'s agreement to sell its Nan Shan Life Insurance Company Ltd. to buyers in China, according to published reports.

In October, AIG (NYSE:AIG) announced a consortium had agreed to pay about $2.15 billion for Nan Shan, Taipei, Taiwan. AIG, New York, owns about 98% of Nan Shan.

The consortium that agreed to acquire the unit includes Primus Financial Holdings Ltd., Hong Kong, and China Strategic Holdings Ltd., Kowloon, Hong Kong.

Nan Shan, established in 1963, has about 4 million policyholders and a network of 24 branches, 450 agency offices and 34,000 agents.

The company has about 4,000 employees.

In declining to approve the agreement, Taiwan's Financial Supervisory Commission said the sale would violate the nation's rules restricting investments in Taiwanese companies by investors in mainland China, according to reports in Thomson Reuters and other media. It also said that both China Strategic, a battery manufacturer, and Primus lacked experience in the insurance business.

In an e-mailed statement, AIG said it was "disappointed" with the decision. It said it had worked with Taiwanese regulators "from the outset of the sale process, and, in addition to meeting the criteria determined by the Investment Commission and other regulators, AIG believes that its additional accommodations of regulatory requests, including a seven-year lockup mechanism agreed to by the Primus Nan Shan consortium and a $325 million escrow agreement agreed to by AIG, demonstrate clear support for the Nan Shan capital structure and incontrovertible commitment to the long-term health and prosperity of Nan Shan."

AIG also said it will meet soon with the board and senior executives of Nan Shan "to determine how best to proceed."

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