NU Online News Service, April 1, 1:33 p.m. – Daido Life Insurance Company, Osaka, made history over the weekend by becoming the first Japanese insurer to demutualize.
A few Japanese life insurers are investor-owned stock companies, but most are mutual insurers, meaning that they are owned by policyholders. Analysts say mutual insurers’ inability to raise capital by issuing stock has contributed to their financial problems.
Daido Life, the ninth largest life insurer Japan, has overcome lack of access to equity capital by distributing most of the company’s pre-conversion value to policyholders, selling some additional stock to the public, and listing its shares on the Tokyo and Osaka stock exchanges starting today.
Daido Life generates the equivalent of about $10 billion in revenue per year, mainly by selling individual term life insurance and products aimed at executives of small and midsize companies. The company says it gets many of its sales through alliances with groups such as the National Federation of Corporate Taxpayers Associations and the Tax Payment Association.
“While the Japanese life insurance industry has contracted over the past several years because of Japan’s weak economy and reduced confidence in life insurance companies caused by the recent failures of a number of life insurers, the company’s business has remained strong,” Daido Life says in a statement on its Web site.