Mitsui Mutual Life Insurance Co. is moving to beef up its foundation funds by around 100 billion yen to improve its credibility, industry sources said Wednesday.
The planned capital buildup at the nation's seventh-largest life insurer will more than double its current 69 billion yen in foundation funds.
The foundation fund, which is the equivalent of a nonlife insurer's capital, consists of money procured from other financial institutions and a contingency reserve.
Financial institutions in the Mitsui group, including Sumitomo Mitsui Banking Corp. and Chuo Mitsui Trust & Banking Co., are expected to chip in, they said.
The 100 billion yen rise in foundation funds will lift Mitsui Mutual's solvency margin ratio to around 500 percent from 427.2 percent as of Sept. 30.
The solvency margin ratio is a key gauge of a life insurer's ability to pay on policy obligations.
Last month, Mitsui Mutual said its ratio, which stood at 492.7 percent as of March 31, fell in the six months to Sept. 30 as lower share prices forced it to book 90.4 billion yen in appraisal losses on securities holdings.
However, the ratio was well above the critical 200 percent line stipulated by the Financial Services Agency.
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