United States insurer Metlife agreed to sell its Taiwan unit to Chinatrust Financial for US$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," Chen said.
Chinatrust, Taiwan's top credit card issuer, said yesterday 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.
The sale would mark the latest exit by a foreign firm from Taiwan's US$52 billion insurance market after American International Group sealed a deal in January to sell its Nan Shan unit.
An earlier US$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.
"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.
JPMorgan advised Metlife, and Standard Chartered advised Chinatrust.
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.
The Metlife acquisition would complete Chinatrust's product lines which cover most financial services.
