Chinatrust to pay $180 million for Metlife Taiwan

TAIPEI (Reuters) – Chinatrust Financial (2891.TW: Quote, Profile, Research) has agreed to buy Metlife’s (MET.N: Quote, Profile, Research) assets in Taiwan for $180 million, three sources close to the situation said on Monday, giving Taiwan’s top credit card issuer its long-awaited entry into the cash-rich local life insurance sector.

Both companies are set to hold a news conference later on Monday to announce the deal, two of the sources said. No further details were immediately available.

“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.”

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.

Chinatrust has been trying to buy an insurance unit for some time after twice being beaten in the race for the AIG unit.

It is Metlife’s second attempt to sell its Taiwan unit after a $112 million deal was blocked by regulators in October, due to concern about the financial structure of the buyer, local firm Waterland Financial (2889.TW: Quote, Profile, Research)

The same fate befell AIG’s first stab at selling Nan Shan. Taiwan’s authorities are sensitive to changes among life insurers because of the huge numbers of policies held by individual Taiwanese.

“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.”

Metlife’s unit has about 600 employees, with less than 1 percent market share.

JP Morgan advised Metlife and Standard Chartered advised Chinatrust.

(Reporting by Faith Hung and Rachel Lee in Taipei and Denny Thomas in Hong Kong; Editing by Jonathan Standing and Jacqueline Wong)

Chinatrust to pay $180 million for Metlife Taiwan