MetLife to Exit Taiwan With Sale of Subsidiary for $180 Million

MetLife Inc. will exit the Taiwan market when it completes the sale of a subsidiary to Chinatrust Financial for $180 million.

The transaction, which needs approval from Taiwan’s regulator, the Financial Supervisory Commission, would allow Chinatrust buy all of MetLife Taiwan Insurance Co. Ltd.

MetLife (NYSE: MET), the largest U.S. life insurer, has operated in Taiwan for more than 20 years.

Christina Tso, a spokeswoman for MetLife, said the company is always evaluating its portfolio of assets in the countries it operates in “and we need to make sure they meet our long-term objectives. Our business in Taiwan, although successful, the growth characteristics and the return no longer fit our strategic objectives.”

MetLife Taiwan is mostly individual life insurance, with about 307,000 policyholders, Tso said.

Last October, the FSC rejected Taiwan-based Waterland Financial Holdings Co.’s application to acquire MetLife’sTaiwan life unit because of concerns about Waterland’s ability to run the life insurance operation, and about funding (BestWire, Oct. 8, 2010).

U.S.-based MassMutual Financial Group said last fall it was planning to withdraw from its life insurance business in Taiwan by selling its stake in a life joint venture to its local partner, Mercuries Corp. (BestWire, Oct. 20, 2010).

In Taiwan, the FSC is dealing with multiple issues in the life sector, along with U.S.-based American International Group Inc.’s (NYSE: AIG) divestment of Nan Shan Life Insurance Co. Ltd. (BestWire, Jan. 18. 2011). Several foreign players have left the market in recent years and others may follow.

One concern is “the risk that exists with the legacy book of business having moved from being diversified across local and foreign players to being more concentrated with a smaller handful of local players,” said Sam Radwan, a partner and co-founder of management consultant Enhance International. This problem “becomes even more of an issue as the regulators look to move to much stricter capital standards by adopting the International Financial Reporting Standards” (BestWire, Jan. 18, 2011).

For local insurers, a key regulatory concern is implementing international financial reporting standards and the impact it will have on capital requirement for legacy business.

Separately, several factors will weigh on the FSC’s review the proposed sale of Nan Shan Life to Ruen Chen Investment Holding Co. Ltd., a new investment company formed by Taiwanese industrial groups. AIG agreed to sell Nan Shan for US$2.16 billion in cash to Ruen Chen (BestWire, Jan. 12, 2011).

Shares of MetLife were trading at $44.20 on the afternoon of March 29, down 1.38% from the previous close.

Metropolitan Life Insurance Co. currently has a Best’s Financial Strength Rating of A+ (Superior).

(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)