The Financial Services Agency exerted improper pressure early last year on Tokio Marine & Fire Insurance Co. to consolidate with Asahi Mutual Life Insurance Co., a Democratic Party of Japan member said Tuesday.
During a meeting of the House of Councilor’s Committee on Financial Affairs, DPJ member Kohei Otsuka said that FSA Commissioner Shokichi Takagi, then head of the FSA’s supervisory division, threatened to revoke Tokio Marine’s operating license if the nonlife insurer decided to suspend its scheduled merger with Asahi Mutual.
The claims were based on an alleged Tokio Marine transcript of a meeting between Takagi and Tokio Marine Vice President Akihiko Mori on January 21, 2002, submitted to the committee by Otsuka.
On Jan. 31, 2002, Tokio Marine and Asahi Mutual announced they had scrapped a plan to merge Tokio Marine Life Insurance Co., a Tokio Marine unit, and Asahi Mutual in March.
Failing to force Tokio Marine’s hand and fearing Asahi Mutual’s collapse, the FSA proceeded to prepare legislation to allow life insurers to lower promised payouts to policyholders, now before the Diet for approval, according to Otsuka.
The transcript includes the signature of a Tokio Marine official whose name could not be obtained and quotes Takagi threatening to revoke Tokio Marine’s operating license if it suspended the Asahi Mutual merger.
In the wake of allegations that financial regulators had tried to intimidate auditors and Resona Holdings Inc., national attention has turned to past and present FSA influence on business decisions at banks and insurance companies.
Asahi Mutual’s failure could trigger two other life insurers’ collapse, whose names were not disclosed during the committee meeting, and Tokio Marine should at least provide funding to Asahi Mutual to shore up its capital, Takagi was quoted as saying.
The FSA could revoke Tokio Marine’s license, as “Article 133 specifies ‘for the general good,’ giving (the FSA) rights beyond what is specified under the (Insurance) Law,” Takagi was quoted as saying.
“This is the kind of misguided FSA behavior that is not only outdated, but is damaging to the Japanese economy,” said Otsuka. He demanded Takagi’s resignation before discussion continues Thursday on a bill to allow life insurers to lower promised premiums.
Financial Services Minister Heizo Takenaka promised an investigation within the week to make sure there was no “undue interference.”
Asahi Mutual, like other major life insurers, has been bludgeoned by policy cancellations, stock price falls and a low interest-rate environment where investment returns lag behind promised payouts to policyholders.
Policy cancellations at Asahi Mutual temporarily soared to 140 percent the previous years’ levels in the two months leading to Jan. 31.
The specter of a crisis may have spurred Takagi to make “some strong comments — perhaps half in jest,” said one FSA colleague, who described Takagi as “perfectionist” and “a determined man who will stop at nothing to protect the financial system.”
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