Midsize life insurer Daihyaku Mutual Life Insurance Co. and Manulife Financial of Canada have signed a definitive agreement to form a joint life insurance company with a future merger in mind, company officials announced Tuesday.
The new firm, to be called Manulife Century Life Insurance Co., will start operations April 1.
Tuesday's agreement will put Daihyaku under the virtual control of Manulife, a leading life insurance company in Canada. Daihyaku and Manulife will each provide 40 billion yen in capital for the new firm, but Manulife will hold 75 percent of all shares with voting rights.
Under the 10-year contract, which is renewable every two years, Daihyaku will gain 80 billion yen immediately from the deal, and the gain will grow depending on the joint venture's earnings, company officials said.
Daihyaku President Shinjiro Kawasaki told a news conference in Tokyo that the deal signals the firm's determination to survive increasingly tough competition amid ongoing "Big Bang" financial deregulation. "The age of full-blooded competition is upon us," Kawasaki said. "Our financial foundation will be strengthened through injections of new capital, and that will allow us to improve our competitiveness and credit standing, as well as to survive the Big Bang."
The firm's existing policies will remain intact under current terms and conditions, the officials said, adding that all rights, values and benefits will be maintained.
Services for those existing policies will be provided by Manulife Century, utilizing Daihyaku's current 6,600 sales representatives, all of whom will transfer to Manulife Century.