Taiwan’s Financial Supervisory Commission (FSC) announced that it will no longer bail out troubled insurance companies in the country after it has spent millions of dollars to operate two troubled insurance firms placed under government receivership.
The FSC refers to the Global Life Insurance Co and Singfor Life Insurance Co, which were placed in government receivership last year due to insolvency and mismanagement.
FSC Chairman Tseng Ming-chung said the two firms will be the last firms that the commission will bail out because the FSC will start assessing early-intervention measures on insurance companies.
The FSC issued the statement after Cathay Life insurance has successfully acquired Global Life Insurance Co and Singfor Life Insurance Co through a public auction held last Monday.
Cathay life prevailed in the fourth-round of bidding with its offer of TWD30.3bn (USD966m) for the two insurers that were placed in government receivership in 2014 due to insolvency and mismanagement.
The acquisition will take effect in early August, Cathay Life said in a statement at the Taiwan Stock Exchange.
Global Life Insurance has about 360,000 policyholders while Singfor Life Insurance has more than 130,000.
The two insurers were placed under government receivership after failing to contain financial losses or management malpractices.
The FSC described the public auction as a milestone in Taiwan’s insurance industry.
Analysts said the winning bid by Cathay Life would mean that the Taiwanese government will be able to reduce the cost of rehabilitating the two insurance firms to TWD22.3bn (USD711m) from the current TWD60bn (USD1.91m).