The Life Insurance Association of Japan has given up on its plan to sell the failed Toho Mutual Life Insurance Co. by the end of this year, association chairman Tomijiro Morita said Friday.
Morita, who is also president of Dai-Ichi Mutual Life Insurance Co., said at a regular news conference that negotiations over the sale of Toho Mutual appear to be stalled by disagreement with prospective buyers over the insurer’s current and future asset values.
Toho collapsed in June after auditors rejected its fiscal 1998 earnings report, demanding that the midsize life insurer write off more bad loans and securities losses.
GE Capital Services of the U.S., which set up an ersatz joint venture with Toho in April 1998 that took over Toho’s new business operations and sales network, is believed to be in talks with the association to buy Toho. However, the industry group has not made public the names or number of firms it is negotiating with.
Morita said that the group is in the “final stage of talks” to sell Toho, adding that it will transfer the business to the Life Insurance Policyholders’ Protection Corp. if negotiations fall through, he added. He declined to specify when the group will decide to give up on selling Toho to a private company.
The Life Insurance Policyholders’ Protection Corp., an industry safety net established in December with funding from 47 life insurers, would probably have to slash benefits of existing contracts significantly if it took over Toho, because, unlike a normal business, the entity will operate conservatively and is unlikely to produce profits to give back to policyholders.
Morita said last month that the industry group wants to reach a basic agreement with a buyer by mid-October so it can transfer all contracts by the end of the year. He cited the Year 2000 computer problem as a possible concern for Toho.
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