Major Japanese :Life Insurance Company Files for Bankruptcy

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10/08 21:07

Japan: Chiyoda Life Files for Bankruptcy Court Protection, President Says

By Miki Anzai

Tokyo, Oct. 9 (Bloomberg) -- Chiyoda Mutual Life Insurance Co., Japan's 12th largest insurer, said it filed court protection, the country's biggest post-war bankruptcy of a life insurer.

The company will be placed under control of an administrator, said Chiyoda President Reiji Yoneyama. Chiyoda is trying to find a foreign partner and is also seeking assistance from Tokai Bank Ltd., though Tokai President Hideo Ogasawara last week said assistance is conditional on Chiyoda changing its business model and forming an alliance with another company.

Given Japan's low interest rates, Chiyoda and other Japanese life insurers are struggling because they are paying more in policy dividends -- an average 4 percent -- than they can earn from investments in an economy where interest rates are close to zero.

The court protection was sought under parts of the Corporate Rehabilitation Law that would let Chiyoda lower its target return on investment, improve its financial health and allow it to find a partner.

The value of Chiyoda's outstanding personal insurance policies for the 12 months to March fell by a fifth as sales slumped. The 96-year-old insurer had unrealized losses of 132 billion yen on its stock holdings and 24 billion yen in losses from its foreign securities holdings.

Japan's Financial Services Agency will hold a press conference on Chiyoda at 10 a.m.

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=blk&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=AOeEaSRQJQ2hpeW9k

-- Carl Jenkins (Somewherepress@aol.com), October 08, 2000

Answers

CBC

Mon Oct 9, 4:47 am

Largest Japanese insurance bankruptcy since WW2

A Japanese insurance company that has filed for court protection from its creditors is the largest to do so since the Second World War.

Chiyoda Mutual Life, with assets of $32 billion US, was the 12th largest insurer in Japan. It is the fifth insurance company to fail since 1997, when the Nissan Life Insurance Company became the first.

The financial industry in Japan has been in trouble since the late 1980s, when massive debts were built up during a period of skyrocketing land and stock prices and runaway speculative spending.

When prices collapsed in the early 1990s, the economy went into a prolonged recession.

The financial regulator said Chiyoda's debts exceeded its assets by more than $315 million. With that kind of debt load, the company's assets wouldn't be sufficient to pay claims in the event of a disaster.

Chiyoda had 13,000 employees and 1.5 million policy holders.

Under the court's protection, the company's assets are shielded from its creditors and some policy holders' claims will still be paid.

-- Rachel Gibson (rgibson@hotmail.com), October 09, 2000.


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