Air Crash Claims Drive Taisei into Bankruptcy

November 26, 2001

Japan’s Taisei Fire and Marine Life Insurance Co. filed for bankruptcy protection under the country’s rehabilitation regulations on Thursday, citing over $60 million in damage claims from aviation reinsurance coverage related to the Sept. 11 attacks on the U.S.

While most Japanese insurers have not had significant exposure to the disaster, Taisei was heavily committed to the aviation reinsurance market through Fortress Reinsurance Co., a North Carolina-based managing agency, which provided pool coverage for of aircraft reinsurance contracts. Taisei was apparently unaware of the extent of its exposure until a number of reinsurance claims were presented over the last week.

Taisei, Nissan Fire & Marine Insurance Co. and Aioi Insurance Co. are the majority owners of Fortress, and all three have significant aviation reinsurance exposure. As the smallest of the three, the losses hit Taisei harder than the others, but their exposures are expected to be considerable as well.

Standard & Poor’s placed both Nissan and Aioi on CreditWatch, and analysts have expressed doubts concerning the pending merger of Taisei with Yasuda Fire & Marine and Nissan, scheduled for April of next year. The two larger companies have expressed support for Taisei, and have indicated that they will guarantee claims payments to its policyholders. They also stated that their merger plans were still continuing, but could be delayed.

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