Friday, March 23, 2001
Tokyo Mutual Set To Fail With Y700bn In Liabilities
TOKYO (Nikkei)--Ailing midtier insurer Tokyo Mutual Life Insurance Co. has decided to abandon attempts to turn itself around and as early as Friday will seek approval for a court-administered rehabilitation, The Nihon Keizai Shimbun learned Thursday.
Faltering share prices have caused Tokyo Mutual's unrealized portfolio losses -- which had climbed to about 94.5 billion yen as of Sept. 30 -- to balloon, and the company expects liabilities will surpass assets at the March 31 close of the fiscal year.
Alliance talks with a foreign-affiliated life insurer, slated to run through late March, were broken off, and Daiwa Bank (8319), Tokyo Mutual's main lender, has rebuffed pleas to spearhead an increase in the insurer's capital by 30 billion yen.
Tokyo Mutual, estimated to have about 700 billion yen in liabilities, will be Japan's seventh life insurer to collapse since World War II.
The company had assets of 1.01 trillion yen as of Sept. 30, down 15% on the year, placing it at the bottom of Japan's 11 leading domestic life insurers. Negative spreads between investment returns and yields promised to policyholders have resulted in losses reaching 10 billion yen per year.
In addition to the poor performance in share prices in the latter half of the fiscal year, the failure of Chiyoda Mutual Life Insurance Co. and Kyoei Life Insurance Co. in the fall have been spurring policyholders to cancel contracts with Tokyo Mutual in favor of companies on sounder footing.
A number of foreign financial institutions are expected to emerge as candidates to sponsor Tokyo Mutual's makeover, including American International Group Inc. (AIG), which had been mentioned as a possible alliance partner.
(The Nihon Keizai Shimbun Friday morning edition) |
