FSC Approves Major Insurance M&A Deal
The Financial Supervisory Commission (FSC) on May 31 provided its conditional approval of Taishin Financial Holdings’ acquisition of Prudential Life Insurance.
The FSC’s first condition is that Taishin make a statement committing to protect employee rights, guarantee long-term operations, and stabilize the shareholder structure of the merged entity. Secondly, Taishin must handover its existing 22.5% stake in Chang Hwa Bank to the custodian bank, the Bank of Taiwan. Taishin on June 2agreed to the FSC’s conditions and received the commission’s final approval.
Tasishin’s Board of Directors last August approved the company’s acquisition of a 100% stake in Prudential Life Insurance for a purchase price of NT$5.5 billion. The successful transaction marks Taishin’s official entrance into the insurance market, as well as the end of a 16-year court battle over the financial holding company’s stake in Chang Hwa Bank.
Taishin Holdings President Welch Lin says the company will withdraw completely from Chang Hwa Bank within six years and would welcome a takeover of its stake in the bank by the Ministry of Finance, with whom it has long fought for majority control.
The acquisition settlement deadline is July 1. According to the FSC, Taishin has promised to maintain all 1,036 current Prudential staff for three years after the transition. In addition, Prudential’s 228,000 clients and 745,000 contracts will remain unchanged until the first quarter of next year.
Local outbreak decimates car sales
Although Taiwan car sales in May rose 2.6% year-on-year, only 34,403 units were purchased – a 9.2% decline from April – thanks to the recent outbreak of local COVID-19 infections and the government’s implementation of Level 3 restrictions.
While sales of domestically produced vehicles such as those offered by Toyota, Ford, and Nissan dropped by 10-30%, imported models saw steady growth, following a long-term trend in Taiwan’s motor vehicle industry. Mercedes sold 2,707 units in May, a 29.7% increase from the previous month. China Motor Corporation (CMC)’s Zinger and Delica models also performed well due to an increase in demand for logistics.
Despite retaining its position as market leader, Toyota’s cumulative sales slumped to 7,955 units, a 12% decline from the same period in 2020. Hotai Motors, Taiwan’s distributor for Toyota, also reported a 40% decline after the local outbreak.
Observers fear that the real impact of the outbreak on Taiwan’s car market is yet to come.
U.S.-bound vaccination travel drives up airline stocks
Last year’s hard-hit airline stocks are now recovering as U.S. and European economies reopen. According to airline employees, recent U.S.-bound flights have been fully booked, with passengers discussing their plans to get vaccinated. EVA Air confirmed an increase in demand for travel to the U.S. and increased the frequency of its Taipei-Los Angeles flights from three to seven flights per day starting from June 7.
EVA Air said it is unclear whether the surge in demand for flights to Los Angeles is a result of people wishing to get vaccinated. However, the airline says bookings for its increased flights – particularly those in business class – have been doing quite well.
Stock prices for both China Airlines and EVA Air hit their daily limit on June 3, closing at NT$20.5 and NT$20.05 respectively.