Chiyoda Mutual Life Insurance Co.'s liabilities are estimated to have exceeded its assets by some 500 billion yen, about 15 times higher than its earlier publicized negative net worth of 34.3 billion yen, industry sources said Tuesday.
Its administrators plan to continue efforts to rebuild the failed life insurance company based on a reconstruction plan they will compile next month, with financial support from American International Group Inc., a major U.S. insurance company.
Chiyoda Mutual Life's negative net worth is highly likely to expand even further, the sources said.
The insurer's negative net worth increased as a result of stricter assessments of its assets introduced ahead of the launch of its reconstruction program, the sources said.
A possible injection of taxpayers' money into Chiyoda Mutual Life will be an issue because the amount of insurance money that policyholders will receive is expected to be cut further to make up for its losses, the sources said.
At the end of March, Chiyoda Mutual Life's assets exceeded its liabilities by 22.7 billion yen. Due to the stock price fall, however, the insurer had incurred a 219.9 billion yen latent loss on its securities holdings by the end of September, when its liabilities effectively exceeded its assets by 34.3 billion yen.
When a life insurance company goes bankrupt, it can receive financial assistance from the Life Insurance Policyholders Protection Corp.
The corporation has 960 billion yen in resources -- 560 billion yen put up by life insurance firms and 400 billion yen provided by the government.
Of the 560 billion yen pool, about 380 billion yen has already been earmarked for Toho Mutual Life Insurance Co., which collapsed in 1999.