3rd UPDATE: Chinatrust Financial Mulling Purchase Of Insurer

Chinatrust Financial Holding Co. (2891.TW), Taiwan's largest private wealth manager by assets, is evaluating acquiring an insurance company to strengthen its foothold in the fast-growing bancassurance market, Chief Investment Officer Daniel IK Wu said Monday.

Falling share prices of insurance companies at home and overseas because of the global economic turmoil have made an acquisition a more sensible option for Chinatrust than setting up an insurance unit on its own, Wu said.

A new unit would usually take seven to eight years to break even, he said.

Wu declined to identify potential targets or say if the company was involved in any talks on the matter. Chinatrust Financial hasn't hired a financial adviser for the potential acquisitions, he said.

Wu said Chinatrust Financial, which also owns Taiwan's largest credit-card issuer, "is evaluating its options," and declined to say when he expects a deal to be made.

Despite falling interest and fee income, insurance premiums from Chinatrust Financial's bancassurance operation increased 17% in 2008, Wu said. "We see a huge potential in this market."

On Monday, the Chinese-language Apple Daily cited unnamed sources as saying Chinatrust is looking into acquiring a foreign insurer and is considering several companies, including Germany's Allianz SE (AZ), Aegon NV (AEG) of the Netherlands and the U.K.'s Prudential PLC (PUK).

Christoph John, Allianz's spokesman for Asia, didn't comment on the Apple Daily report.

He said Taiwan "is a really important market for the company," as it is Allianz's sixth-largest life insurance market by gross premiums. The company has invested and will continue to invest in its Taiwan operations, he said.

Allianz increased its number of sales agents in Taiwan by 500 to a total of 1,700 agents in 2008.

Aegon and Prudential couldn't immediately be reached for comment.

Chinatrust Financial is competing with dozens of local and foreign banks to serve a small but highly fragmented banking market in Taiwan. Its peer, Fubon Financial Holding Co., paid US$600 million in October to buy the life insurance unit of ING Groep NV to expand its share of the life insurance market.

-By Perris Lee Choon Siong, Dow Jones Newswires; [phone]; [e-mail]