Kyoei Mutual Fire & Marine Insurance Co. is expected to abandon its plans to merge with Millea Holdings Inc. in favor of operating under the wing of the National Mutual Insurance Federation of Agricultural Cooperatives (Zenkyoren), company officials said Wednesday.
Zenkyoren, which conducts the insurance business of Japan's agricultural cooperatives, plans to take a majority stake in Kyoei Mutual after the nonlife insurer converts itself into a stock company in April, the officials said.
The firm is expected to announce details of the deal as early as Thursday, they added.
Meanwhile, Millea Holdings, created in April via the merger of Tokio Marine & Fire Insurance Co. and Nichido Fire & Marine Insurance Co., issued a brief statement confirming that Kyoei Mutual may abandon its plans to integrate its operations with those of Millea Holdings in April.
Millea had planned to form the Millea Insurance Group, consisting of one life insurer and three nonlife insurers. The life insurer in question is Asahi Mutual Life Insurance Co.
Kyoei Mutual, established in 1942, already has close business ties with Zenkyoren and has a strong customer base in the agricultural and fisheries sectors.
Standard & Poor's Corp. responded the same day by saying that it may revise ratings on Kyoei Mutual if reports that the company has abandoned its plan to join the Millea group are confirmed.
The U.S. credit-rating agency said it is now drawing up an outlook for Kyoei Mutual's BBB-minus long-term rating.
S&P said the withdrawal from consolidation with the Millea group will not affect the ratings on the founders of Millea Holdings Inc. -- Tokio Marine and Nichido Fire.
The long-term ratings on the two companies are AA-minus with negative outlooks.