Sumitomo Life Insurance Co. plans to raise about ¥100 billion in capital as early as next month to strengthen its financial base, a spokesman said Sunday.
The insurer is considering borrowing perpetual subordinated loans from domestic banks, including Sumitomo Mitsui Financial Group Inc., Sumitomo Life spokesman Yoshiki Miyazaki said.
Life insurers are bolstering their balance sheets as the financial crisis erodes the value of their investments and earnings. They are also taking action because the government may tighten capital rules.
"Choosing perpetual subordinated loans to raise funds is aimed at improving capital quality in advance as we anticipate that capital requirements may become stricter," Miyazaki said.
Mitsui Life Insurance Co. said earlier this month it will raise ¥60 billion to boost capital, while Asahi Mutual Life Insurance Co. said last month it is aiming to raise about ¥35 billion by year's end.
Unrealized profits on the securities Sumitomo Life holds fell to ¥120 billion at the end of September from ¥711 billion a year earlier, the company said.
The Nikkei stock average has slumped more than 40 percent this year.
"There's no problem in the company's financial health" because Sumitomo Life's solvency margin stood at 996 percent at the end of September, Miyazaki said.
Solvency margin ratio is a gauge of life insurers' ability to pay policyholders. Sumitomo Life's ratio was the fifth highest among Japan's nine biggest insurers at the end of September. The industry requires the ratio to be more than 200 percent, the threshold for a healthy life insurer.