To ward off bankruptcy amid the deteriorating investment climate, the Financial Services Agency will allow life insurance companies to reduce the investment returns they have promised to policyholders, sources said Monday.
Life insurers are struggling from negative spreads, in which the returns on their investments have been significantly below the interest rates they promised to policyholders.
The FSA's decision apparently reflects its judgment that if the spread is left to widen further, some insurers could go bust.