Troubled life insurer Asahi Mutual Life Insurance Co. said Tuesday it is in talks to sell off its sales division to a Tokio Marine & Fire Insurance Co. subsidiary in the face of policy-holder flight and dismal market prospects.
The sale of Asahi Mutual's prized sales division is a preliminary step toward a potential merger between Asahi Mutual and Tokio Marine Life Insurance Co. in March 2003, after Asahi Mutual becomes a joint stock company, Asahi Mutual officials said.
"Given the market conditions and the general prospects for the life insurance industry, we thought it was best to take any steps that we can right now toward future consolidation," said Asahi Mutual President Yuzuru Fujita.
The scheme would bring a core part of Asahi Mutual's marketing strength to Tokio Marine. It effectively speeds up Asahi Mutual's planned union with the Tokio Marine-led Millea Insurance Group, which will form this April.
Asahi Mutual had originally planned to join the Millea group under a holding company in April 2004.
But as reports of its dwindling capital take a toll on its base of policyholders, Asahi Mutual deemed it wiser to seek shelter, even if it meant the danger of ending up as a subsidiary to Tokio Marine, market watchers say.
"Whether our name remains is irrelevant," Fujita said. "Our role is to form the core of the life insurance force in the Millea group."
Asahi Mutual also said it is seeking about 50 billion yen in the form of an injection from Tokio Marine and other companies, to strengthen its finances.
The life insurance company has been plagued by a low interest rate environment and a high level of investment in shareholdings.