The Life Insurance Policyholders Protection Corp., an insurance industry safety net, formally asked the government Friday to take "necessary measures" to beef up the safety net in case more life insurers go bankrupt. The corporation, set up a year ago with funding from the nation's 47 life insurers, submitted the request to the Finance Ministry, which presides over the life insurance industry. The move came as it became clear that the safety net will have to fork out more than 300 billion yen to cover the capital deficit of the failed Toho Mutual Life Insurance Co. When established last December, the corporation decided to raise 400 billion yen over 10 years. It has collected 40 billion yen or 50 billion yen from its member insurers so far -- far short of the funds needed just to cover the Toho Mutual deficit. A life insurance industry group is currently in the final stage of talks with GE Capital, which had tied up with Toho Mutual before its collapse in June, over the insurer's possible sale. The group will probably decide by the end of next week whether to close the deal with GE Capital or transfer Toho's contracts to the industry safety net, group officials said. Friday's move by the industry fund might pave the way for an injection of public funds, which the Finance Ministry is already considering. Exactly how the safety net will receive additional funding has yet to be decided, but the ministry is reportedly considering giving a government guarantee to the fund so it can borrow funds when needed. Toho Mutual collapsed in June under the weight of its bad loans and contracts from the bubble economy that promised high yields to policyholders. Toho's capital deficit, estimated to be some 200 billion yen at the time of its collapse, is expected to have swelled because asset values have gone down in the last half year.
