MetLife Inc.’s (MET), in its attempt to sell off its Taiwan unit got three bidders for the unit. Taishin Financial Holding Co. Mercuries Life Insurance Co. and Chinatrust Financial, Taiwan’s top credit card issuer have bid for the Taiwan unit.
MetLife is not the first foreign insurance company contemplating to exit Taiwan. In 2009, Dutch companies like ING Group NV (ING) and Aegon NV (AEG) are known to have pulled out their businesses from Taiwan.
Also, in January 2011, American International Group Inc. (AIG) vended off its Nan Shan Life Insurance Co. in Taiwan, to Ruen Chen conglomerate, for a cash deal of $2.16 billion. AIG managed to sell the unit in its second attempt, long after its decision in October 2009 and having faced several hiccups in the process.
This is, however, not the first time that MetLife has attempted to vend its Taiwan unit. In April 2010, the company had almost sealed a deal with Waterland Financial Holdings Co., a tiny financial firm in Taiwan, who had agreed to purchase it for $112 million. However, the deal did not materialize as the regulatory authorities in Taiwan were skeptical about the financial health of Waterland.
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 is taking this step to shore up its finances post the global economic crisis.
MetLife had 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.
Moreover, MetLife faced other operating challenges in Taiwan that include amendments in International Accountancy Standards, tightening monetary policies following Chinese and other regulations where foreign insurers have been debarred from investing in government bonds.
MetLife Inc. reported fourth quarter operating earnings of $1.14 per share, well ahead of 96 cents earned in the year-ago quarter, and the Zacks Consensus Estimate of $1.10. The upside was primarily due to strong growth in the International business segment, strong underwriting results as well as higher variable annuity deposits and net investment income. This was partially offset by underperformance at its banking and the U.S. segments, higher expenses and higher-than-expected derivative losses.
We maintain our Neutral rating on MetLife Inc. The quantitative Zacks #3 Rank (short-term Hold rating) for MetLife indicates no clear directional pressure on the stock over the near term.
Headquartered in New York, MetLife, Inc. is a leading provider of insurance and financial services to a broad spectrum of individual and institutional customers.
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