Life insurers raise dividends after seven-year hiatus

The nation’s top eight insurance firms were able to boost their dividends to policyholders for the first time in seven years due to progress in writing off nonperforming loans and reducing operating costs, earnings reports released June 9 showed.

But premium revenues fell at the eight insurers in the year that ended in March due to factors such as a continued rise in cancellations of group annuity insurance. In total, the firms posted 21.4 trillion yen in premium revenues, a 5.4 percent decline compared with the previous year. However, bad loans fell 50.7 percent on a year-on-year basis to 1.09 trillion yen, making the rise in dividends possible.

However, an increase in industry competition and market liberalization forced insurers to depart from their tradition of offering identical dividend increases. For example, the largest life insurer, Nippon Life Insurance Co., basically boosted dividends on loading profits by 100 yen for every 1 million yen in claims payable, while Asahi Mutual Life Insurance Co. and Dai-ichi Mutual Life Insurance Co. increased theirs by 50 yen and 75 yen, respectively.

The eight insurers also suffered from the effects of a downturn in stock prices toward the end of the business year, which greatly reduced latent profits on their equity holdings. Industry leader Nippon Life logged a 32.61 percent drop in such profits, while the smallest of the eight, Chiyoda Mutual Life Insurance Co., saw its hidden equity assets deflate by 94.45 percent.

In terms of total assets, three life insurance firms — Asahi, Chiyoda and Mitsui Mutual Life Insurance Co. — registered a year-on-year decline. The latest reports have come at a time when public confidence in the stability of the domestic life insurance industry wavered with the effective liquidation of the second-tier insurer Nissan Mutual Life Co.