Prudential Insurance Co. of America announced that, following the recent approvals by the Tokyo District Court, it had completed its rescue plan for the insolvent Japanese insurer Kyoei Life Insurance Co. Ltd. and would resume business under the name Gibraltar Life Insurance Co. Ltd.
Prudential’s completion of Kyoei’s rescue plan and AIG’s takeover of Chiyoda Life bring to an end two of the biggest financial failures in postwar Japan, and give the two U.S. companies a greatly increased share in the Japanese life and pensions market, the second largest in the world after the U.S.
AIG committed over half a billion for Chiyoda, and Prudential paid twice that to takeover Gibraltar. It acquired all of its capital for 50 billion yen (approx. $403 million) and made subordinated loans of 98 billion yen (approx. $790 million) to begin clearing away the mountain of debt, caused by bad loans and the reduced value of its securities holdings, which had forced its predecessor, Kyoei, to seek court protection. As with AIG, prudential eschewed any reliance on payments from Japan’s Policyholders Protection Fund.
Gibraltar will start with a strong base – a distribution system with 7500 agents and over 6 million policyholders. It will fit well with Prudential’s existing operations in Japan which are focused on individual life policies. “Gibraltar Life has established business relationships with associations and groups,” stated Kiyofumi Sakagachi, Executive V.P. in charge of Prudential’s international insurance operations.” By working strategically, Prudential’s insurance companies in Japan can build momentum and create a positive ripple effect in both companies, especially in the areas of sales, finance, investment management and information technology.”
Prudential becomes the largest foreign insurer in Japan with its operations there accounting for around 13 percent of its global turnover. Prudential CEO Arthur F. Ryan was optimistic, stating, “We believe that Prudential’s experience in the Japanese insurance market during the last two decades effectively positions us to work with Gibraltar Life to restore financial viability and to grow our position in the Japanese life insurance market.”
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