Taiwan’s Financial Regulator Shuts Walsun Insurance

By Janet Ong

Jan. 17 (Bloomberg) -- Taiwan’s financial regulator said it has shut down property insurer Walsun Insurance Ltd. after the company failed to meet minimum capital-requirement levels.

“We had repeatedly asked Walsun to raise its capital to the mandatory level, but it wasn’t able to do so,” Sean Chen, chairman of the Financial Supervisory Commission, said in a briefing today. “The company wouldn’t be able to meet its obligations to its customers as its finances were in a dire state.”

Walshun is the second insurer shut down by the government, following the takeover of property insurer Kuo Hua Insurance Co. in 2005. Taiwan’s insurance companies hold NT$535.6 billion ($16 billion) in securities linked to Fannie Mae and Freddie Mac.

The 80-year-old insurer, formerly known as Tai Ping Insurance Co., had losses of NT$2.87 billion at the end of September, and debt of NT$870 million, said Huang Tien-mu, head of the insurance bureau at the commission.

Walsun’s policy holders will be covered by a NT$2 billion insurance stabilization fund, Chen said. The regulator has asked Taiwan Insurance Institute, a semi-official agency, clean up the closely held Walsun and look for a buyer.

Walsun had 1.6 percent of Taiwan’s property insurance market at the end of 2008, according to the regulator.

The risk-based capital ratio, or RBC, represents an amount of capital, based on an assessment of risk, which a company should hold to protect customers against adverse developments. Taiwan requires insurers to have a minimum ratio of 200 percent. Taiwan’s insurance companies, other than Walsun, have a ratio of more than 300 percent, Chen said.

The commission declined to say what Walshun’s RBC was.

To contact the reporter on this story: Janet Ong in Taipei at jong3@bloomberg.net