The U.S. investment company Ripplewood Holdings LLC, the parent of Shinsei Bank, will take over the operations of the failed Daiichi Mutual Fire & Marine Insurance Co., industry sources said Thursday.

Daiichi Mutual's administrators, including the Marine and Fire Insurance Association of Japan, are expected to announce the deal later this week, the sources said.

The administrators, however, said it will take some time for them to reach a conclusion on exactly which entity will take over Daiichi Mutual's operations.

In a statement, the administrators said they are "making efforts to reach a conclusion as early as possible, with priority given to protecting policyholders."

If the deal is realized, the actual management of the new Daiichi Mutual will likely be left to Shinsei Bank, formerly Long-Term Credit Bank of Japan, the sources said.

Shinsei Bank hopes to use Daiichi Mutual's customer base to expand its own retail banking business, the sources said.

The Shinsei Bank group is expected to put up 30 billion yen to 40 billion yen to create a new insurance company and transfer Daiichi Mutual's insurance contracts to it.

The new company's solvency margin, a key gauge of an insurer's ability to pay insurance claims, is expected to stand at 300 percent, well above the financially strong-or-weak line of 200 percent.

The sources said Daiichi Mutual's negative net worth is now estimated to have swelled from 124.5 billion yen as of March 31.

This will be offset by reducing insurance payments to Daiichi Mutual policyholders and financial support from the Nonlife Insurance Policy-holders Protection Corp. of Japan, the industry's safety net for policyholders, they said.

Daiichi Mutual, a Tokyo-based midsize insurer, collapsed in May, becoming Japan's first casualty and property insurer to go belly-up in the postwar era.

It had been active in sales of savings-oriented insurance products, but sluggish stock prices since the bursting of the bubble economy in the early 1990s and ultralow interest rates had made it difficult for the company to generate a sufficient profit from its investment operations.

Ripplewood leads a consortium that bought the LTCB from the government in March. The LTCB relaunched itself as Shinsei Bank in June. In October 1998, the LTCB collapsed due to huge problem loans and was placed under state control.

Shinsei Bank was initially considered the most likely buyer of Daiichi Mutual, but it came under public criticism for the way it handled loans to the failed department store chain Sogo Co.

As a result, Shinsei Bank apparently decided to avoid taking a high-profile approach, leaving Ripplewood to emerge as the buyer, the sources said.

Shinsei Bank refused to accept a debt waiver request by Sogo, forcing the retail chain to file for court-mandated corporate rehabilitation in July.

Instead, the bank sold its Sogo loans to the governmental Deposit Insurance Corp. under the terms of the contract by which Ripplewood bought the LTCB.

Under the contract, Shinsei Bank is allowed to sell to the DIC any of the loans it inherited from the LTCB whose market value falls by more than 20 percent within three years.

The DIC initially agreed to forgive part of the loans to Sogo, but public anger over use of taxpayer money to bail out a private company forced Sogo to abandon the request for debt forgiveness and file for rehabilitation under court supervision.