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Fitch: No Rating Impact on CTBC Group from Taiwan Life Purchase
May 15, 2015 / 9:28 AM / 2 years ago

Fitch: No Rating Impact on CTBC Group from Taiwan Life Purchase

(The following statement was released by the rating agency) TAIPEI/HONG KONG/SINGAPORE, May 15 (Fitch) Fitch Ratings says that CTBC Financial Holding Co., Ltd.'s (CTBC Holding) proposed acquisition of 100% of Taiwan Life Insurance Co., Ltd. (Taiwan Life) through a share swap will have no immediate impact on the ratings of CTBC Holding and its subsidiaries. Taiwan Life has an asset size of TWD516bn, representing 14% of CTBC Holding's consolidated assets at end-March 2015. The transaction is scheduled to be completed by October 2015, subject to shareholder and regulatory approval. Fitch expects the financial risk arising from the acquisition to be containable, given that CTBC Holding will issue new shares to Taiwan Life's shareholders. CTBC Holding's double leverage ratio would remain moderate at 104.6% on a pro forma basis, while the statutory sum-of-parts capital adequacy ratio would remain sound at 154.9%, well above the regulatory minimum of 100%. Meanwhile, Taiwan Life reported a risk-based capital (RBC) ratio of 250%-300% at end-2014, indicating no need of a parental capital injection in the near term. The acquisition is part of the CTBC group's strategy to strengthen its market position in domestic life insurance. Taiwan Life has a well-established franchise in Taiwan, with 68 years of operation. Its 5,500 agents will complement CTBC Life Insurance Co., Ltd.'s (CTBC Life) distribution channels, which now comprise a sales force of 1,700, together with bancassurance, insurance broker and telemarketing. CTBC Life's pro forma market share would be 10.1% in 2014 in terms of first-year premiums, and would have had combined assets of about TWD895bn at end-2014, compared with 7.5% and TWD387bn without the acquisitions. CTBC Holding's subsidiaries are CTBC Bank Co., Ltd., CTBC Life and CTBC Securities Co., Ltd. The list of ratings is as follows: CTBC Holding: - Long-Term IDR at 'A'; Outlook Negative - Short-Term IDR at 'F1' - National Long-Term Rating at 'AA+(twn)'; Outlook Negative - National Short-Term Rating at 'F1+(twn)' - Viability Rating at 'a' - Subordinated debt rating at 'A+(twn)' CTBC Bank Co., Ltd.: - Long-Term IDR at 'A'; Outlook Negative - Short-Term IDR at 'F1' - National Long-Term Rating at 'AA+(twn)'; Outlook Negative - National Short-Term Rating at 'F1+(twn)' - Viability Rating at 'a' - Support Rating at '3' - Support Rating Floor at 'BB+' - Senior unsecured bonds' National Long-Term Rating at 'AA+(twn)' - Subordinated bonds' Long-Term Rating at 'A-' and National Long-Term Rating at 'AA(twn)' - Perpetual cumulative New Taiwan dollar subordinated bonds' Long-Term Rating at 'BBB' and National Long-Term Rating at 'A+(twn)' - Perpetual cumulative US dollar subordinated bonds' Long-Term Rating at 'BBB' - Perpetual non-cumulative New Taiwan dollar subordinated bonds' (Basel III Additional Tier 1 capital) National Long-Term Rating at 'A(twn)' - Subordinated bonds' (Basel III Tier 2 capital) National Long-Term Rating at 'AA-(twn)' CTBC Life: - Insurer Financial Strength (IFS) Rating at 'A'; Outlook Negative - National IFS Rating at 'AA+(twn)'; Outlook Negative CTBC Securities Co., Ltd.: - Long-Term IDR at 'A'; Outlook Negative - Short-Term IDR at 'F1' - National Long-Term rating at 'AA+(twn)'; Outlook Negative - National Short-Term rating at 'F1+(twn)' Contacts: Sophia Chen, CFA, CPA (CTBC Holding, CTBC Bank and CTBC Securities) Director +886 2 8175 7604 Fitch Australia Pty Ltd, Taiwan Branch Suite 1306, 13F, 205, Tun Hwa N. Road Taipei Joyce Huang, CFA (CTBC Life) Director +852 2263 9595 Jonathan Lee (CTBC Holding, CTBC Bank and CTBC Securities) Senior Director +886 2 8175 7601 Jeffrey Liew (CTBC Life) Senior Director +852 2263 9939 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com; Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com. Additional information is available at www.fitchratings.com. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S FREE WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Fitch Australia Pty Ltd holds an Australian financial services licence (AFS licence no. 337123) which authorises it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001.

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