Chinatrust deal seals Metlife Taiwan exit

By Faith Hung and Rachel Lee

TAIPEI (Reuters) – U.S. insurer Metlife (MET.N: Quote, Profile, Research) agreed to sell its Taiwan unit to Chinatrust Financial (2891.TW: Quote, Profile, Research) for $180 million, giving Chinatrust its long sought-after entry into the sector.

“The acquisition will be positive for Chinatrust in the longer term, as it can leverage its strong banking network into the insurance business,” said Chen Tungli, a fund manager at Schroders in Taiwan.

“However, any effective synergy would not emerge until at least three years later.”

Chinatrust, Taiwan’s top credit card issuer, said on Monday it would pay for the deal from its own funds and retain all the unit’s staff.

The deal still needs regulatory approval which could slow its progress.

Regulators are highly sensitive to changes among life insurers because of the huge numbers of policies held by individual Taiwanese and concerns over the state picking up the bill if companies run into financial difficulties.

The sale would mark the latest exit by a foreign firm from Taiwan’s $52 billion insurance market after American International Group (AIG.N: Quote, Profile, Research) sealed a deal in January to sell its Nan Shan unit.

An earlier $112 million attempt by Metlife to sell its Taiwan unit was blocked in October by regulators concerned about the financial structure of would-be buyer Waterland Financial

(2889.TW: Quote, Profile, Research).

“A while ago, we realized the business would be substantially better if it’s owned by a financial holding company,” said Peter Smyth, Metlife’s regional managing director Asia Pacific.

Metlife’s Taiwan unit has about 600 employees, and some 307,000 policyholders, giving it a market share of less than 1 percent. AIG’s Nan Shan unit by comparison has 4 million policyholders, or one sixth of Taiwan’s population.

JP Morgan advised Metlife and Standard Chartered advised Chinatrust.

PICKY REGULATORS

For Chinatrust, , the deal marks the end of a lengthy search for an insurance unit to add to its stable, a search that had become something of a personal quest for President Daniel Wu. It was twice beaten in the bidding for the AIG unit.

“I am feeling very happy right now,” Wu told the media briefing. “Chinatrust is paying 0.57 time price to book. We think the price we’re paying is very reasonable.”

The Metlife acquisition would complete Chinatrust’s product lines which cover most financial services.

“This is good news for Chinatrust,” said Jeff Chung, an analyst at Mega Securities in Taipei.

“Their bancassurance business is already No.1 in Taiwan, so adding an insurance company can reduce their costs. It will also have a good effect on profitability.”

(Additional reporting by Denny Thomas in Hong Kong; Writing by Jonathan Standing; Editing by David Cowell)

Chinatrust deal seals Metlife Taiwan exit