Taiwan AIG unit buyer moves to meet regulator

TAIPEI (Reuters) – The buyer of AIG’s (AIG.N: Quote, Profile, Research) Taiwan unit will raise cash and cut the proportion of debt in its funding as part of a commitment to meet the regulator’s conditions, in a move that could bring it a step closer to wrapping up the drawn-out $2.16 billion deal.

Taiwan’s financial regulator, the Financial Supervisory Commission (FSC), said in a statement on Thursday that buyer group Ruen Chen Investment had agreed to raise T$10 billion ($338 million) this year to meet funding requirements and had also agreed to keep sales agents on staff for at least two years.

It said Ruen Chen cannot have more than 48 percent of its deal funding from syndicated loans, and it requested the group keep T$30 billion in cash or assets in a custodian account for possible funding needs for the next 10 years, and put its entire stake in the unit, Nan Shan Life, in trust for 10 years.

“It would be to Ruen Chen’s advantage for a future review if all these requests are met,” FSC commissioner Yeh Yin-hua told Reuters separately.

Struggles with a regulator acutely sensitive to the fate of Nan Shan’s 4 million policyholders, or one-sixth of Taiwan’s population, have dominated AIG’s attempts to sell the unit over the past 17 months.

Its first attempted sale was blocked last year as the-then buyers were judged not to have met the regulator’s five strict conditions.

Ruen Chen’s shareholders, retailer Ruentex (2915.TW: Quote, Profile, Research) and its property affiliate Ruentex Development (9945.TW: Quote, Profile, Research) and shoe maker Pou Chen (9904.TW: Quote, Profile, Research), must use their own money or conduct a rights issue to fund the deal, the statement said.

“We will hold a meeting to carefully evaluate these requests and make a decision accordingly,” Ruen Chen Chairman C. T. Cheng said.

The regulator’s concerns over the amount of loans the buyer group is taking out stem from its desire to keep insurance firms’ finances stable and to avoid the possibility of saddling them with debt if loans go sour.

The regulator’s five conditions are: fund-raising ability for future operations; a long-term commitment to run Nan Shan; experience in running an insurance business; taking care of employees and policy holders, and funding sources that meet Taiwan regulations.

(Reporting by Faith Hung and Lin Miaojung; editing by Jonathan Standing)

Taiwan AIG unit buyer moves to meet regulator