TAIPEI: Taiwan's financial regulator said it has taken over two loss-making local insurers, citing their "deteriorating" financial health while assuring clients that they will be protected by the government.
The Financial Supervisory Commission announced the surprise takeover of Global Life Insurance and Singfor Life Insurance in a statement late Tuesday.
"We had no choice but to take this drastic step in order to streamline the insurance market and maintain stability," said Commission chairman William Tseng.
In a statement the Commission said the financial condition of the two companies, which have a combined negative net worth of $1.6 billion, was rapidly "deteriorating".
An official from the Taiwan Insurance Guaranty Fund said the finances of the two firms "failed to improve despite several bids of capital injection in the past few years".
In a bid to avoid stirring panic among half-a -million clients of the companies, the Commission said "the two firms will continue to operate with the interests of the policyholders unaffected".
Local media suggested the takeover would cost the government hundreds of millions of dollars.
The government has in the past taken over companies in the crowded insurance sector. Tuesday's move marks the first such takeover since 2009 when the cash-strapped Kuo Hua Life Insurance came under government control.
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