Staff writer

Yasuda Kasai CIGNA Securities Co., a Japanese-American joint venture formed to provide 401(k)-style pension plans, aims to grab 5 percent of a market it estimates will be worth 30 trillion yen in 10 years, said Akimasa Oshima, president and chief executive officer.

"It is a life-size target," Oshima said in an interview. That kind of market share could translate into 500,000 to 600,000 workers enrolled in the pension company's plans, assuming 50 percent to 60 percent of all firms adopt such a system.

Oshima expects the firm to realize a cumulative surplus in its sixth year of operations.

The joint venture was launched in Tokyo in May, with a 50-50 capital subscription by Yasuda Fire & Marine Insurance Co., a major nonlife insurer, and the Philadelphia-based CIGNA Global Holdings, Inc., a leading insurance group in the United States.

It plans to offer comprehensive services, from designing pension plans and recording individual accounts to educating company employees on financial investments and selling investment products.

In "defined-contribution" pension plans like the 401(k), company employees regularly set aside a portion of their salary for retirement, which they distribute among various investment options, such as stocks, bonds and investment trusts. Employers can pay matching contributions to gain a tax advantage.

Benefits are determined according to investment results, unlike current "defined-benefit" plans at Japanese firms where benefits are fixed. Legal arrangements that will allow the introduction of defined-contribution plans in Japan are expected to be ready as early as fall 2000.

CIGNA is engaged in the corporate pension business in the U.S., with some 5,000 corporate clients and their 6 million employees managing assets worth $46 billion.

Oshima, a former Yasuda Fire managing director, said he was impressed by the intensity of CIGNA's services in 401(k) plans. For example, call-center operators who answer customers' questions are trained to understand the corporate culture of each client.

"We are going to apply such knowhow in a Japanese way" depending on customers' needs, he said.

Yasuda Fire has been in close contact with the CIGNA group since 1972, when Yasuda Fire and Insurance Company of North America, a precursor of CIGNA, formed a tieup in the U.S.

Oshima named Nippon Life Insurance Co. the biggest potential competitor getting ready to provide comprehensive services, though he said he is confident Yasuda Kasai CIGNA can offer more flexible investment options than Nippon Life.

He downplayed the threat of Fidelity Investments, the largest 401(k) provider in the U.S., which plans to become another full-service provider in Japan, saying Fidelity may face difficulties cultivating corporate customers here.

The joint venture may possibly cooperate with other financial institutions, which want to enter the new pension market but cannot afford a huge investment, he reckoned. In what he calls an "original-equipment-manufacturing-style" tieup, Yasuda Kasai CIGNA could, for instance, provide call-center services for a bank under the bank's brand name.

The joint venture will start operations in October to sell investment trusts to employees of prospective corporate customers -- most of which are from Yasuda Fire's customer list -- until the 401(k)-style pension system is introduced.

The firm will use a staffed call center, an automated telephone voice response system and the Internet to communicate with customers, "so that everything can go smoothly for us and customers when the real thing comes," Oshima said.