Japan Life Insurer Files Bankruptcy
TOKYO (AP) _ Kyoei Life Insurance Co. filed for court protection from its creditors Friday, becoming the largest insurance company to fail in this country since World War II. Kyoei Life had total debt of 4.53 trillion yen ($41.7 billion) as of March.
Japan’s financial industry has been undermined by massive bad debt left over from the speculative spending of the late 1980s, when land and stock prices skyrocketed. Prices collapsed in the early 1990s, pushing the economy into a recession from which it is just now beginning to recover.
The news of the Kyoei’s failure came just weeks after another insurer, Chiyoda Mutual Life Insurance Co., filed for protection.
Kyoei’s total assets _ 4.6 trillion yen ($42.4 billion) _ make it the eleventh largest among Japanese life insurers. It was the sixth life insurance company in Japan to fail since the end of World War II.
Until Friday, Chiyoda had been the largest insurer to file for bankruptcy in postwar Japan, with assets of 3.5 trillion yen ($32.3 billion).
Kyoei was forced to give up efforts to rebuild its crumbling finances after a planned business partnership with American insurer Prudential Insurance Co. broke down, executives said.
Prudential said in a statement later Friday, however, that it is ``prepared to work quickly and diligently″ to support Kyoei’s efforts to reorganize itself under bankruptcy law.
President Shoichi Otsuka apologized for the ``trouble″ caused to policyholders.
Though it is too early to gauge the impact on the life insurance industry, the failures were likely to increase concern among policy holders, and make prospective buyers more selective.
The high-profile failures have raised concerns over the general health of Japan’s economy and government efforts to finally pull it out of the doldrums it has struggled in for more than a decade.
Officials were quick to try to allay such fears.
``Various industry safety-nets will keep the effects from spreading into the overall economy,″ Takashi Nakanomyo, the deputy director-general of the Economic Planning Agency, said after Kyoei’s application. ``But one can’t say that (the failures) won’t affect corporate sentiment.″
Earlier this week, Japan’s government formally proposed a $102.1 billion public spending program to get the world’s second-largest economy back on its feet.
The latest in a series of economic stimulus plans from the country’s conservative administration, it earmarked $43.6 billion to build public infrastructure including a high-speed telecommunications network to link the nation’s schools.