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To: X Y Zebra who wrote (1723)	6/7/1999 11:36:00 AM
From: Chip McVickar	Read Replies (1) \| Respond to of 3536

Gastón, Here's another few bricks falling out of the Wall surrounding Japanese financial systems. Toho is debt ridden to 1.64 billion. WSJournal p 14a 6/7/99: "Japan's huge life insurers, which have sold long-term savings products with guaranteed returns...have suffered through the 90's as the companies have failed to produce enough investment income to keep up with these guarantees...Many companies have survived by cashing in equity investments made decades ago..."For the time being, it's almost a hopeless situation."...Weaker insurers are teetering on the edge of bankruptcy, and Toho might not be the last company to fail...." Friday June 4, 8:19 am Eastern Time FOCUS-Japan faces second post-war insurer failure By Chisa Fujioka TOKYO, June 4 (Reuters) - Japanese financial regulators on Friday ordered Toho Mutual Life Insurance Co to halt part of its operations, making it the second major life insurer to go bust in the nation's post-war history. Financial Supervisory Agency (FSA) chief Masaharu Hino said Toho Mutual had given up on its operations and asked regulators to issue the order, which it saw as the best way to ensure an orderly winding down of its business. The order will prevent the insurer and its policyholders from cancelling existing policies, while prohibiting the insurer from extending new loans or paying dividends to policyholders. Toho Mutual will continue to collect premiums and make payments to beneficiaries. The move, which was widely expected, is unlikely to rattle the country's financial system, analysts said. Toho Mutual Life's sales force and most other operations have already been transferred to GE Edison, a joint venture it set up last year with GE Capital, the financial unit of General Electric Co (NYSE:GE - news) of the United States. GE Capital holds more than 90 percent of the voting rights in the venture. Toho Mutual, with fewer than 200 workers remaining on its own payroll, was left only with the job of managing its existing insurance policies. ''I think we should not over-react to the report since its impact seems to be marginal,'' said Kazunori Jinnai, deputy general manager at Daiwa Securities SB Capital Markets Co. The Tokyo stock market showed only a muted reaction to media reports at mid-afternoon about the FSA move, which was only the second failure of a major life insurer in the post-war era. Nissan Mutual Life Insurance Co was ordered to halt operations in 1997. The Nikkei average of 225 leading shares closed up 73.25 points or 0.45 percent at 16,300.75 on Friday. Toho Mutual's solvency ratio at the end of March 1998 was 154.3 percent, the lowest among Japan's 16 first- and second-tier life insurers. A fall below 200 percent is considered a warning sign of financial instability. Japanese life insurers are saddled with a persistent negative spread -- the gap between the returns on their investments, which remain low as domestic interest rates hover near zero, and the payments they have promised to policyholders, which were set at relatively generous levels during the heady days of inflated asset prices a decade ago. Insurers have also been hit hard by government deregulation, which facilitated the entry of new and nimbler rivals. Pension fund management, once the exclusive territory of life insurers and trust banks, is now up for grabs. The recent launch of inspections by the FSA into the health of insurers is expected to put further pressure on weaker players to either draft realistic survival plans or close down, analysts said. search.news.yahoo.com