Daido Life Insurance Company, Osaka, says its plan to demutualize by April 2002 was approved at a policyholder representatives meeting. With the approval, Daido has come a step closer to becoming the countrys first demutualized insurer.
Daidos individual policyholders will have a 110-day window running from July 13 to October 31 to raise their concerns about aspects of the demutualization plan–a process that appears similar to a policyholder comment period in the U.S–the company says. The announcement is posted on its Web site at www.daido-life.co.jp. Daido plans to receive regulatory approval for the demutualization in November.
After the demutualization, Daido will change its name to Daido Life Insurance Corp., and its shares will be traded on Japans two big boards, the Tokyo Stock Exchange and Osaka Securities Exchange. The insurer says the new public company will have assets of $60.75 billion (75 billion based on an exchange rate of 100=$0.81), issue 1.5 million shares and distribute them to its 929,000 policyholders.
The Japanese government allowed insurers to demutualize last year as a way of consolidating an industry that is hamstrung by rising policyholder claims payments and falling investment returns. However, with the Nikkei Index at its 10-year low, many insurers have shelved the idea of demutualization. To date, Daido is the only company that is implementing demutualization plans. Analysts are cautious in assessing Daidos demutualization (see NU, Feb. 19). They say that the difficult business environment, coupled with a complex timeframe and other regulatory requirements the company has to follow for demutualization, may diminish the benefits a public company would bring to its shareholders and policyholders.
Reproduced from National Underwriter Life & Health/Financial Services Edition, July 20, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.