The Life Insurance Association of Japan endorsed a liquidation scheme June 20 for Nissan Mutual Life Insurance Co. that will create a new entity to manage its policies and write off an estimated 100 billion yen worth of the failed insurer's debts over a period of five years.
The firm's failure is the first in Japan's life insurance industry in five decades. But the plan for its liquidation was only made possible through such painful means as whittling down personnel and operating costs and reducing the rates of interest Nissan Mutual initially promised to policyholders.
The new firm, which will be established sometime this month, will also suspend dividends until the debts are cleared. At the same time, it will start to reduce the amount of money it refunds to policyholders who decide to prematurely cancel their policies, for a period of seven years. The maximum reduction will be 15 percent so that cancellations are kept to a minimum.