Sumitomo Mitsui Banking Corp. and Mitsui Mutual Life Insurance Co. are in final talks to make the insurer a joint-stock company by next April, with the bank taking a roughly 40 percent stake in it, officials at both companies said Friday.
According to a business plan being compiled by Mitsui Mutual Life, it will convert its "kikin" funds into capital when it becomes a stock company. Kikin funds are equivalent to a stock company's capital to which SMBC and others have contributed.
The insurer's capital will probably amount to about 300 billion yen.
When it becomes a stock company, it will issue shares of that amount, and SMBC, which has contributed nearly 50 percent of the kikin, is expected to take about 40 percent of the shares.
The insurer is expected to announce the plan by the end of this month, the officials said.
The remaining stakes will be held by Chuo Mitsui Trust & Banking Co., Mitsui Sumitomo Insurance Co. and a few other Mitsui group firms, they said.
Before becoming a stock company, the life insurer will step up restructuring efforts, including reducing its domestic shareholdings, eliminating jobs and closing outlets, they added.
The move is the latest development in the life insurance industry, where insurers are converting themselves into joint-stock companies in a bid to increase fundraising capabilities. Daido Life Insurance Co. and Taiyo Life Insurance Co. have already become stock companies.