AIG plans to inject $513.5 million in capital into failed Chiyoda Mutual Life Insurance Co, sponsoring a revival plan for Japan’s 12th largest life insurer.
“As a result, AIG will significantly expand its presence in the traditional Japanese life insurance market, gaining access to an important market segment in Japan through a revitalised Chiyoda sales network,” AIG Chairman Maurice Greenberg told a Reuters news service affiliate.
The move marks the fifth foreign bailout of a failed Japanese insurer. They have struggled as a result of rising policy cancellation, poor investment returns, falling equity prices and high fixed yield payments promised to policy holders.
AIG will sponsor the rehabilitation of Chiyoda, which became Japan’s second-biggest corporate failure since the war when it went under last year with liabilities of $25.2 billion. AIG had been widely expected to buy the operation rights to Chiyoda in its drive to increase its presence in Japan’s life insurance and savings market, the world’s second largest.
After the takeover, Chiyoda will become a publicly owned company and its name will be changed to AIG Star Life Insurance Co Ltd, court administrators told a Reuters affiliate reporter.
Separately, a consortium made up of Yamato Mutual Life Insurance Co. and the Internet investment company Softbank Corp. will take over operations of smaller Taisho Life and set up a joint venture life insurance company. The plan has already received government approval.
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