The Prudential Insurance Co. of America has reportedly offered to invest at least 150 billion Yen ($1.3 billion) to bail out failed Japanese insurer Kyoei Life. It also announced that its Taiwan operations have become a financially independent subsidiary.
Prudential’s commitment to fund Kyoei’s rehabilitation confirms its announced intention to expand in the Japanese life market, but the price is high. The most recent estimates show that Kyoei’s liabilities exceed its assets by at least 185.5 billion yen ($1.61 billion) and could go much higher.
In addition Prudential has said that it would not seek participation by other life insurers in implementing its rescue plan, nor would it ask for assistance from the Japanese government.
Negotiations are continuing between Japanese administrators and policyholders to reduce the payouts Kyoei is obligated to make on its policies by roughly 10 percent. Prudential’s offer makes it more likely that eventually an agreement can be reached. Regulators are hoping to submit a rehabilitation plan by February 20th, and, if its accepted Kyoei could reopen for business in April.
Prudential also announced the restructuring of its operations in Taiwan with the creation of a financially independent subsidiary company, “Prudential Life Insurance Company of Taiwan.”
The company will serve as a platform for further expansion in the Chinese market, and will expand the role of other Prudential operations in the sales of securities and mutual funds.
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