10.18.2001
Cathay Life and Capital Securities to form FHC

• Cathay Life Insurance is to form a financial holding company (FHC) with Capital Securities (6005.TT). Share swap ratio still to be confirmed but price per share of Capital is expected to be above book value, a 25% premium to yesterday’s closing price. UWCCB remains undecided between Cathay or Fubon’s FHC, however, Lin Yuan group shows strong interest in the bank as well. Capital commands 3.4% of Taiwan’s brokerage market while Cathay Life is the largest life insurance company on the island. A successful merger would result in the largest FHC in Taiwan with 518 branches. We believe Cathay Life has promising prospects in the long term.