On Tuesday, Thomson Reuters reported that MetLife Inc. (MET) may dispose of its insurance business in Taiwan to Waterland Financial Holdings Co., a tiny financial firm in Taiwan, who has agreed to purchase it for $114 million (T$3.6 billion). However, the final decision by both parties is expected by Apr 19. MetLife’s move is aimed to shore up its finances post the global economic crisis.
 
Formerly, Waterland Financial along Hontai Life, Chinatrust Financial Holding Co. and Cardif Assurance Vie were reported to have submitted bids to acquire the MetLife unit in December 2009. Additionally, in January 2010, Taiwan Life Insurance Co. offered $122 million to buy MetLife’s insurance wing in Taiwan. However, the deal did not materialize due to some undisclosed issues.
 
MetLife entered the Taiwanese market in 1988 and has 400,000 clients there. However, management of MetLife has been considering exiting Taiwan since last year when the global economic breakdown created an unprofitable investment environment and financial losses in the Taiwan unit. Additionally, MetLife faced other operating challenges in Taiwan that include amendments in International Accountancy Standards, cues of tightening monetary policies following China and other regulations where foreign insurers have been debarred from investing in government bonds.
 
Moreover, MetLife is not the first foreign investment company to exit Taiwan. In 2009, companies like the ING Group (Dutch), Prudential Life (London), Aegon (Dutch) and American International Group Inc. (AIG) are known to have pulled out their businesses from Taiwan.
 
MetLife is on a development and restructuring mode to keep in pace with the economic volatility. In January 2010, the company issued notes worth $2.5 billion to fund its developmental activities. This also indicates that the global economic downturn has not left MetLife unscarred. Hence, the disposal of Taiwan insurance assets to Waterland appear to be a viable option for MetLife and diverting its funds to profitable ventures such as the recent ALICO acquisition from AIG can also provide buoyancy to the company’s financials.
 
The company continues to incur investment losses and low investment income although its sturdy capital and diversified business mix places MetLife in a relatively advantageous position in the industry. We believe that once the economy rebounds and unemployment trends become favorable, MetLife will benefit from the savings and investment opportunities that will come ashore.
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