Asahi Mutual Life Insurance Co. will deepen planned pay and staff cuts because a business integration scheme with Tokio Marine & Fire Insurance Co. had to be scrapped in January, company sources said.
The company decided to step up its cost-cutting efforts, including increasing the pay cut to around 15 percent from 10 percent. The number of jobs to be cut will be above the earlier targeted 1,000, depending on future negotiations between management and the firm's labor union, the sources said Wednesday.
Expanding the restructuring will enable Asahi Mutual Life to shrink its annual operating costs by 35 billion yen in the 2004 business year.
In a package of cost-cutting measures adopted in November, Asahi Mutual Life was to cut salaries by 10 percent in 2003 and reduce its workforce by 1,000. The package is aimed at cutting the struggling insurer's annual operating costs by 20 billion yen.
The package was drafted on the assumption that Asahi Mutual Life and Tokio Marine & Fire would integrate their life insurance operations in March 2003.
The integration plan was also announced in November.
The scrapping of the plan was an additional blow to Asahi Mutual Life. It is seeking a capital infusion of about 100 billion yen from Dai-Ichi Kangyo Bank and other lenders to bolster its financial standing.
Tokio Marine & Fire and Asahi Mutual Life announced Jan. 31 they scrapped the plan to integrate their life insurance operations in March 2003 by merging Asahi Mutual and a Tokio Marine subsidiary.
But the two companies said they will continue to pursue an overall consolidation program, under which the management of Tokio Marine and Asahi Mutual will be integrated with two other companies around 2004 under the proposed Millea Holdings Inc.