More trouble was announced this morning for Japan’s life insurance sector with the news that Kyoei Life Insurance, the nation’s 11th largest life insurer, is preparing to file for court protection. With total debts of $42.4 billion it becomes the biggest corporate bankruptcy in Japanese history.
Kyoei joins Chiyoda Life, which filed for protection earlier this month, on the growing list of failed life insurers. As with Chiyoda the basic causes are linked to the catastrophic drop in real estate prices, the continued weakness in Japanese equity markets, a decline in premium payments, and the outright cancellation of policies, coupled with the high rates guaranteed returns the company is obligated to pay.
Kyoei had been in talks with the U.S. Prudential concerning a possible rescue plan, since the collapse of Daiichi Mutual Fire & Marine in June with which it was linked, but according to reports in France’s Les Echos balked at Prudential’s demand for a 20 percent stake in exchange for the bailout.
In other Japanese life news, AIG confirmed that the court handling the Chiyoda bankruptcy had formally appointed the company as a sponsor to help with the restructuring. No financial details were released, but it’s expected to take until next March before any definitive rescue plan can be implemented.
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