The Financial Supervisory Agency ordered financially troubled Daiichi Mutual Fire & Marine Insurance Co. to suspend its operations Monday. It is the first bankruptcy in the nation's nonlife insurance sector.
The FSA said that it found the midsize casualty and property insurer, which has assets exceeding 1.3 trillion yen, had a capital deficit of 48.8 billion yen as of March 31, after taking into consideration unrealized losses in its stock portfolios and required reserves for its nonperforming loans.
The FSA also believes that Daiichi Mutual Fire has purchased some financial products -- which sources at the nonlife insurance firm say were sold by a foreign financial institution -- designed to conceal losses it has been suffering, agency officials said.