The receiver of the failed Chiyoda Mutual Life Insurance Co. is expected to pick American International Group Inc. to buy its operating rights.
The receiver will shortly submit a rehabilitation plan to the Tokyo District Court naming the major U.S. insurance group as Chiyoda's sponsor, according to industry sources.
In October, Chiyoda filed with the court for protection from creditors, becoming the biggest Japanese insurer to fail.
AIG soon expressed interest in Chiyoda, but negotiations between AIG and the receiver proceeded roughly, partly due to differences over their assessment of the health of Chiyoda's assets.
Consequently, the receiver later added GE Capital Group and Tokio Marine & Fire Insurance Co. to the list of possible buyers of Chiyoda's operating rights.
The sources said the receiver is now likely to select AIG because it is offering better conditions.
AIG has apparently raised the purchase price, paving the way for Chiyoda to continue operations without financial support from Insurance Policyholders Protection Corp., a public policyholders' safety net, they said.
Chiyoda's negative net worth is expected to have expanded from the originally estimated 34.3 billion yen to around 700 billion yen, the sources said.
AIG appears likely to further expand its presence in the life insurance business in Japan by buying Chiyoda's rights, they said.
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