Taiwan-based China Development Financial has agreed to acquire compatriot China Life Insurance.

On Friday, both firms held shareholder meetings to approve the merger, which will create the second-largest financial holding company in Taiwan after Cathay Financial Holdings, Taiwan News reported.

China Life has a high capital adequacy ratio and is ranked sixth among the country's insurance companies. According to the report, this allows the insurer to withstand a financial downturn or debt bomb like China's Evergrande collapse. China Life recorded a net after-tax profit margin of NT$4 billion (SG$194.6 million) from investments in August, making it the market’s third best performing insurer.

As part of the merger, China Development Financial will relocate to share office space with China Life. China Development Financial’s chairman, Chang Chia-juch, said that he was confident the merger can boost competitiveness and result in a strong financial performance in 2022.

China Life will be delisted from the Taiwan Stock Exchange on Dec. 27 as part of the transaction.