Taiwanese government cabinet-level Financial Supervisory Commission moved on Tuesday to take over Kuo Hua Life Insurance Co. Ltd., declaring that the troubled insurer had failed to satisfy capital adequacy ratio requirements. FSC Minister Sean Chen said Kuo Hua, which had a negative net worth of NT$57.9 billion (US$1.77 billion) as of the end of June, had ignored repeated FSC directives to improve its financial health through raising additional capital. “The purpose of the takeover is to ensure that the company will complete plans to boost capital levels and improve its financial structure,” he said. “The government has no plans to terminate Kuo Hua's operations or liquidate the business.” Chen said the takeover will not affect the company's day-to-day operations or the rights of policyholders. The company can still take on new business, he added. Taiwan Insurance Guarantee Fund, with assistance from the Taiwan Insurance Institute, will oversee the company during its nine-month period of FSC control. Kuo Hua is the country's first life insurance company to be taken over by the government in 40 years. The minister said Kuo Hua has a good sales team and if they can continue to perform well, FSC intervention could end before its mandate expires in April 2010. According to a person familiar with the matter, frequent changes to the insurer's directors and supervisors affected corporate governance standards.
