UPDATE: Primus Back In Nan Shan Bid; Forming JV With Taiwan Secom, Goldsun

Primus Financial Holdings Ltd. is once again bidding for American International Group Inc.'s (AIG) Taiwan life-insurance unit, this time with Taiwan Secom Co. (9917.TW) and Goldsun Development & Construction Co. (2504.TW), both of which are controlled by a prominent local family.

Hong Kong-based Primus' latest offer for Nan Shan Life Insurance Co. comes after Taiwan's financial regulator rejected the company's US$2.15 billion joint bid for Nan Shan with Hong Kong-listed China Strategic Holdings Ltd. in August, citing concerns about China Strategic's financial strength and commitment to Nan Shan.

Primus' new consortium joins Chinatrust Financial Holding Co. (2891.TW), Cathay Financial Holding Co. (2882.TW), Ruentex Group and Fubon Financial Holding Co. (2881.TW) in the race for Nan Shan, whose large customer base makes it an attractive acquisition target to firms looking to secure a bigger share of the island's crowded insurance market.

AIG has been looking for a buyer for Nan Shan as it tries to shed non-core assets and repay the funds received through a U.S. government bailout during the financial crisis.

Primus' decision to bring in local partners backed by the prominent Lin family, whose business interests include property development, cement production and manufacturing of home security devices, could help tip the balance in its favor this time around. However, neither Taiwan Secom, a home security supplier, nor Goldsun Development, a developer, have experience in the life-insurance or financial-related industries, which could present a hurdle.

Taiwan Secom's director Max Chu told Dow Jones Newswires on Tuesday the three companies are in the process of setting up a joint venture to formally bid for Nan Shan, and have already expressed their interest in Nan Shan to AIG.

He added Taiwan Secom and Goldsun will jointly hold a controlling stake in the venture. Chu declined to say how much the venture will offer for Nan Shan.

Goldsun wasn't immediately available for comment. AIG spokeswoman Lauren Day and a spokeswoman for Primus both declined to comment.

The other known bidders for Nan Shan have offered between US$2.20 billion and US$3.00 billion for Nan Shan, with Chinatrust submitting the highest bid, a Taiwanese lawmaker said last week, citing information from his contacts at the U.S. Treasury Department.

Whether AIG's latest bid to sell its unit succeeds depends on Taiwan's Financial Supervisory Commission. The FSC has said its approval of a potential sale will depend on whether a buyer has sound financing and insurance experience, will look after policyholders and staff and make a long-term commitment to the company, and can meet future funding needs.

Chinatrust, Cathay and Fubon already have insurance operations, although the latter two are better capitalized. Ruentex lacks significant experience operating an insurance company.

Nan Shan is the biggest foreign player in the island's insurance market in terms of market share, a local banker who isn't involved in the deal said earlier. The market's high penetration rate of about 14% and low profit margins have prompted some foreign investors to exit the island, the banker added.

-By Aries Poon, Dow Jones Newswires; 886-2-25022557; aries.poon@dowjones.com

--Fanny Liu and Nisha Gopalan contributed to the article.

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