The failed Yamato Life Insurance Co. has submitted a rehabilitation plan to the Tokyo District Court with the aim of resuming operations June 1 under the aegis of major U.S. insurer Prudential Financial Inc.
Under the plan, Yamato will carry out a 10 percent cut in its legal reserves set aside for future policy benefits and lower the average rate of guaranteed yields to individual policyholders to 1.0 percent. The company plans to notify policyholders of the changes to contracts by around April 10.
Yamato, which picked Prudential's Japanese insurance unit, Gibraltar Life Insurance Co., as its rehabilitation sponsor after going under last October, will rename itself Prudential Financial Japan Life Insurance.
Under the U.S. insurance group, Yamato will aim to restructure into a company specializing in sales of insurance products at bank outlets.
"We hope to build (Yamato) as the third pillar of profitability for the (Prudential) group," Toru Matsuzawa, the rehabilitation administrator assigned by Prudential who will probably head the new company as president, said at a news conference Monday in Tokyo.
According to the rehabilitation plan, Yamato will also apply a surrender charge of up to 20 percent over the next 10 years to reduce returns in the case of a contract being canceled before its full expiration.
To help cover Yamato's negative net worth of ¥64.3 billion, Gibraltar Life will pay ¥3.2 billion to acquire the business rights of Yamato. Life Insurance Policyholders Protection Corp. of Japan, a safety net body of life insurers, will provide ¥27.8 billion.
Yamato will reduce its capital to zero before receiving another ¥6.9 billion from Gibraltar Life as fresh capital and becoming its wholly owned subsidiary.
Yamato hopes to have its rehabilitation plan approved by the court by April 30.