Chinatrust Wants to Buy AIG's Nan Shan Life

Published: Tue 06 Jul 2010

Thomas Kristoffersen

Chinatrust Financial Holding Company would like to purchase the Taiwan life insurance operations of American International Group (AIG), according to its president, which would pit the Taiwan banking organization against its would-be past partners in the takeover of the company.

A consortium that includes China Strategic Holdings Ltd.-a former battery manufacturer-and private equity firm Primus Financial Holdings Ltd., both headquartered in Hong Kong, began an agreement in October to purchase the AIG operation known as Nan Shan Life Insurance Company for $2.15 billion. However, worries that the corporations were inexperienced in the insurance industry and may have connections to mainland Chinese interests have delayed the deal's approval. Last month, both parties agreed to push back the deal's deadline to October 12.

It remains unclear whether AIG, 80 percent of which is owned by the United States government, will accept a rival bid for Nan Shan Life Insurance. A spokesperson from AIG could not be reached immediately for comment.

"Since regulators have not approved China Strategic's bid for Nan Shan, Chinatrust is eager to renew its offer for the life insurance subsidiary in the best interest of AIG shareholders including U.S. taxpayers," said Chinatrust's president Daniel Wu in a statement. Chinatrust was one of many bidders for Nan Shan Life in 2009 but lost the bidding to the China Strategic consortium. Mr. Wu did not specify how much Chinatrust would pay for the life insurance company.

Up to this point, Chinatrust was expected to team up with its former competitors if their purchase of Nan Shan Life had succeeded. China Strategic said in November that it intended to sell a 30-percent stake in Nan Shan to Chinatrust in return for a 9.95-percent stake in the Taiwan-based financial conglomerate.

The presence of Chinatrust was intended to boost confidence in Nan Shan's ability to grow with new ownership-a goal that was never reached. Instead, regulators griped that Chinatrust's deal with the buyers only made a not-yet-approved acquisition even more complicated.

In late June, China Strategic reported that it had allowed its share-swap agreement with Chinatrust to expire with the expectation that doing so would expedite the approval of the Nan Shan Life takeover.

China Strategic was not immediately available for comment. Robert Morse, Primus chairman, refused to comment.