Asahi Mutual Life Insurance Co. plans to refinance some 50 billion yen in loans from several financial institutions, including Dai-Ichi Kangyo Bank, to keep its foundation fund unchanged at 100 billion yen, company officials said Monday.

The insurer was scheduled to repay the 50 billion yen portion in July, the sources said.

By refinancing the debt, Asahi Mutual hopes to prevent its solvency margin, a key gauge of financial health, from falling.

The foundation fund is the equivalent of a nonlife insurer’s capital and consists of money procured from other financial institutions and a contingency reserve.

The solvency margin of a life insurance company indicates its ability to pay out policy obligations in the event of a disaster or unforeseen loss, and roughly corresponds to the excess of assets over liabilities.

Asahi Mutual Life’s solvency margin was 634 percent as of Sept. 30, well above the 200 percent designated as the minimum to evidence an insurer’s soundness.

Asahi Mutual Life plans to become a stock company by the end of 2004, before joining the Millea Insurance Group.

The latter is a holding company to be set up by Tokio Marine & Fire Insurance Co., Nichido Fire & Marine Insurance Co. and Kyoei Mutual Fire & Marine Insurance Co.

The Millea group will be Japan’s first comprehensive alliance integrating life and nonlife insurance businesses.

Industry analysts said Asahi Mutual Life aims to strengthen its foundation fund before becoming a stock company.

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