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Taiwan regulator issues guidelines for Prudential unit bidders

By Asia Asset Management  
June 2, 2020

Taiwan’s financial regulator says potential buyers of the local insurance unit of UK’s Prudential Financial, Inc. must be financially sound and committed to the domestic market for the long term.

Prudential, which decided in February to pull out from Taiwan’s insurance market after 30 years for unspecified reasons, opened a public tender for the unit, Prudential Life Insurance (Taiwan), on June 1.

Qualified bidders have to comply with a number of requirements during due diligence, the Financial Supervisory Commission (FSC) says in guidelines issued last week.

Among other things, their debt ratios and capital adequacy ratios will have to meet new international accounting rules, to show they are financially sound.

The rules, which Taiwan will adopt in 2025, require local insurers to calculate contract liabilities at their present value in order to make it easier to assess their financial performance.

“The bidders are required to be long-term committed to the local insurance market, employee protection, as well as client interests,” the FSC says in a statement on May 29.

According to a Hong Kong insurance analyst, large Taiwanese financial institutions such as Taishin Financial Holdings, Union Bank of Taiwan, and First Financial Holdings have been speculated to be among the potential buyers.

“We believe…potential bidders should be the top financial institutions in Taiwan that aim to expand their market share in the fast-growing domestic insurance market. It won’t be a problem for them to meet the regulatory requirements,” the analyst tells Asia Asset Management, speaking on condition of anonymity.

Taiwan’s life insurance assets rose to NT$29.3 trillion (US$975.2 billion) last year from NT$26.3 trillion in 2018, according to figures from the Taiwan Insurance Institute.

Prudential’s Taiwan unit had around NT$181.8 billion of insurance assets at the end of 2019.