Midsize insurer Chiyoda Mutual Life Insurance Co. and Maine-based disability insurance firm UNUM Corp. will strengthen business ties hoping to jointly develop and market products, the firms' officials announced Monday.
The officials told a news conference at a Tokyo hotel that the firms will package their products together so they can offer a wider range of services to both corporate and individual customers.
Both firms will gain a lot by combining Chiyoda's strength in medical insurance and UNUM's expertise in long-term disability insurance, executives of the firms said.
Specifically, Chiyoda will consider establishing a subsidiary to sell group customer insurance products developed jointly by the two firms, said Reiji Yoneyama, president of Chiyoda Mutual Life.
The two firms will also consider sales of UNUM's individual long-term disability insurance products through Chiyoda's sales channels, the officials said. UNUM is currently applying for a license to sell such products in Japan.
Details of the business alliance will be worked out by a study group to be set up by the end of the month.
Chiyoda Mutual Life, the nation's 11th largest life insurer in terms of total assets, is believed to be suffering from worsening assets, as well as a drop in procurement of new contracts. The firm's total asset volume declined by 20 percent in the first half of this fiscal year to 4.63 trillion yen.
Chiyoda's move is part of the life insurance industry's efforts to survive under mounting pressure by financial authorities to improve their financial health.
Yoneyama also said Chiyoda plans to raise 70 billion yen in subordinated bonds and loans from more than 20 firms it has close relationships with, including Tokai Bank, in a bid to strength its capital base.
This will help bring Chiyoda's solvency margin up to about 300 percent, he said.