2nd UPDATE:Prudential Unit May Buy Stake In Yamato Life
March 02 2009 - 6:19AM
Dow Jones News
The court-appointed administrator for Yamato Life Insurance Co.
said Monday that it has reached an agreement with a unit of
Prudential Financial Group (PRU) to help with Yamato's
restructuring, a move that could ultimately lead to a stake
investment by the unit in the failed insurer.
The deal would allow Prudential's unit, Gibraltar Life
Insurance, to discuss details with Yamato's administrator and the
Life Insurance Policyholders Protection of Japan - an
industry-organized safety net for insurers - on how they would turn
around the failed insurer. After restructuring, Gibraltar would
take over Yamato's operations including customer contracts.
Yamato's court-appointed administrator also said that it plans
to ask the Life Insurance Policyholders Protection Corp. of Japan
for financial support as Yamato had negative net worth of Y64.3
billion as of Oct. 17.
A Gibraltar spokesman said that it will take a while to evaluate
how much it will cost to turn around Yamato and how much of a stake
the company would take.
"We'll discuss details from now on how we can support Yamato,"
he said, adding nothing concrete has been decided.
Prudential in the past has helped to turn around failed insurer
Kyoei Life Insurance Co. in 2001, renaming it Gibraltar Life. In
Japan, Prudential operates Gibraltar Life and Prudential Life
Insurance, with both assets totaling Y5.8 trillion as of March
2008.
Yamato Life Insurance filed for bankruptcy protection last
October following mounting write-downs on securities holdings.
The failure of the Japanese life insurer, although it was ranked
only 33rd in Japan in terms of assets, came as a shock in October
since it was the first Japanese financial-services company to
succumb to the market turmoil, underscoring how much the broader
sector has been hurt by the financial crisis.
Although Yamato's situation differed greatly from other,
healthier, Japanese life insurers, life and non-life insurers have
also been hurt by increasing losses on securities valuations due to
falling share prices.
-By Atsuko Fukase, Dow Jones Newswires; 813-5255-2957;
atsuko.fukase@dowjones.com