Taisei Fire & Marine Insurance Co., which failed last year, will reduce some insurance claim payouts to corporate clients by 25.8 percent, according to a rehabilitation plan submitted Friday to the Tokyo District Court.
Fire and liability policies covering factories and office buildings will be subject to the cuts.
Taisei Fire failed in November after incurring losses related to the Sept. 11 attacks in the United States. Its liabilities currently exceed its assets by 94.5 billion yen.
Sompo Japan Insurance Inc., a company that will be formed Monday via the merger of Yasuda Fire & Marine Insurance Co. and Nissan Fire & Marine Insurance Co., will take over Taisei Fire’s policies and will provide roughly 30 billion yen in funds.
The company will guarantee all claim payments for individuals and some small and midsize businesses. It will cover the claims with an expected 8 billion yen in aid from the Non-Life Insurance Policy-Holders Protection Corp.
The special fund will provide 90 percent guarantees on noncompulsory automobile insurance policies and fire and casualty insurance policies taken out by individuals and smaller businesses. The remaining 10 percent will be covered by Sompo Japan.
The company currently managing Taisei’s existing insurance policies will be merged on Dec. 1 with Sompo Japan.
Administrators have filed for damages of 3.1 billion yen against former Taisei executives for management decisions that led to the midsize nonlife insurer’s failure. Taisei had exposed itself to overseas reinsurance claims currently estimated at 132.8 billion yen.
The Financial Services Agency on Friday approved a planned merger between Yasuda Fire & Marine Insurance Co. and Nissan Fire & Marine Insurance Co.
Yasuda will be the surviving entity, with an equity swap ratio of 0.36 Yasuda share for one Nissan share. The merged entity will be called Sompo Japan Insurance Inc.
Yasuda President Hiroshi Hirano will assume the presidency of the new company, which will be set up Monday.
The two nonlife insurers had initially planned to merge in April along with Taisei Fire & Marine Insurance Co., but the plan was postponed after Taisei collapsed in November due to massive reinsurance claims resulting from the Sept. 11 terrorist attacks in the United States.
The merger is the latest amalgamation of casualty insurers, which have been accelerating such moves since last year in a bid to survive.
On April 2, Tokio Marine & Fire Insurance Co. and Nichido Fire & Marine Insurance Co. integrated their operations under Millea Holdings Inc.
Six months earlier, on Oct. 1, Sumitomo Marine & Fire Insurance Co. and Mitsui Marine & Fire Insurance Co. merged into Mitsui Sumitomo Insurance Co.
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