Property and casualty insurer Nipponkoa Insurance Co. said Friday it has agreed to tie up in the nonlife insurance business with Meiji Yasuda Life Insurance Co., which will be created through a merger of Meiji Life Insurance Co. and Yasuda Mutual Life Insurance Co.
Nipponkoa, established in April 2001 through the amalgamation of Nippon Fire & Marine Insurance Co. and Koa Fire & Marine Insurance Co., will supply nonlife products to Meiji Yasuda, it said.
“Based on this agreement, we will start detailed discussions and preparations . . . including which products to supply,” Nipponkoa said in a statement.
Meiji Life President Ryotaro Kaneko is expected to be named president of Meiji Yasuda, sources said. Meiji Yasuda will rank third in assets among insurance companies in Japan after Nippon Life Insurance Co. and Dai-Ichi Mutual Life Insurance Co.
Meiji Life, which has 17 trillion yen in total assets, ranks fourth in Japan, and Meiji Yasuda, with 10 trillion yen in assets, is fifth.
Meiji Life and Meiji Yasuda have said they plan to merge in April 2004, but sources said the merger is likely to take place sooner.
The two insurers reached a basic agreement in January to merge their businesses.
Meiji Life has close ties with Mitsubishi Tokyo Financial Group Inc., Yasuda is closely linked to Mizuho Holdings Inc., and Nipponkoa is close to the UFJ group under UFJ Holdings Inc.
A business tieup between Nipponkoa and Meiji Yasuda will give the new firm close business ties to the three major banking groups in Japan.
Insurers said solvent
The recent stock market plunge will not undermine the ability of life insurers to pay out benefits to policyholders, the head of the Life Insurance Association of Japan said Friday.
“Insurance firms are maintaining sufficient levels of solvency,” Shinichi Yokoyama, also president of Sumitomo Life Insurance Co., told a news conference.
Yokoyama acknowledged the stock plunge will have some impact on life insurers’ business because the equity market is in a “near panic” situation.
“But insurers are striving to reduce risks,” he said, adding there is no problem in their solvency.
Yokoyama also said he wants the government to pay more attention to stock price movements when managing its economic policy.
“Stock prices represent a valuation of Japan’s economy itself,” he said, “there’s a need to implement an antideflation package as well as accelerated bad-debt disposals.”