Midsize life insurer Yamato Mutual Life Insurance Co. and a group led by Softbank Corp. plan to take over the failed Taisho Life Insurance Co., sources said Tuesday.

The two firms are holding discussions with financial authorities and administrators of Taiho Life, according to the sources.

Yamato Mutual and Softbank Finance Corp., a financial unit of the Softbank group, are considering setting up a 50-50 joint life insurance firm with initial capital of 1 billion yen to inherit Taisho Life's insurance policies, the sources said.

They will then call for further participants from various sectors, including retailers, general traders and card companies.

If realized, it will be the first time a consortium of firms from multiple sectors has entered the insurance market.

Financial authorities will soon decide whether to license the new company, the sources said.

According to the plan, the new company will initially take over Taisho Life's employees and policies with Yamato Mutual transferring its employees, policies and assets to the new firm by around spring 2002, the sources said.

Under the scheme, Yamato Mutual will effectively transform itself into a joint stock company with an expanded business base in preparation for ever-increasing competition.

Meanwhile, the Softbank group aims to further diversify its Internet-related investment business by entering the insurance industry, the sources said.

Taisho Life failed in August amid a capital-building scandal involving Yoshihiko Kokura, the head of Claremont Capital Holding Inc., the life insurer's largest shareholder.

Kokura, who had earlier offered to bail out the troubled insurer, was arrested Aug. 28 for allegedly defrauding Taisho Life of 8.5 billion yen.

Rehabilitation delay

Negotiations between the failed Chiyoda Mutual Life Insurance Co. and its top prospective sponsor will drag into mid-February, beyond the original Jan. 31 target deadline, Chiyoda Mutual administrators said Tuesday.

At issue is the administrators' desire not to tap into funds held by the life insurance industry's safety-net body, the Life Insurance Policyholders Protection Corp., to cover a portion of the insurer's 500 billion yen capital deficit. The safety net is already slated to provide about 145 billion yen to the failed Daihyaku Mutual Life Insurance Co.

Ongoing negotiations with American International Group, which has offered to support the insurer's rehabilitation, have stalled, the administrators said.

As stipulated in the fast-track rehabilitation law, under which the mid-tier insurer applied for court protection in October, Chiyoda Mutual's administrators must receive approval for their rehabilitation plan by the end of March to be eligible for public assistance.