Tokio Marine, Asahi Mutual scrap merger


Tokio Marine President Kunio Ishihara and Asahi Mutual President Yuzuru Fujita

TOKYO, Japan -- Japan's Tokio Marine & Fire Insurance Company and Asahi Mutual Life Insurance Corp have agreed to cancel a proposed merger between Asahi Mutual and Tokio Marine's life insurance business.

The companies chiefs admitted at a news conference on Thursday that they had failed to reach an agreement on the details of the merger plan they announced in November.

Last November, Tokio Marine and Asahi Mutual agreed to accelerate a plan to integrate their life insurance operations in line with the planned creation of the Millea Insurance Group.

The merger was slated for completion in March 2003.

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Under the plan, Asahi Life would sell its Mutual sales division to Tokio Marine. But the deal was reportedly derailed after Tokio Marine refused to infuse funds to Asahi.

Asahi had sought to integrate with the Tokio Marine subsidiary in order to increase its competitiveness due to the gloomy climate of Japan's life insurance industry.

Tokio Marine rose 0.96 percent to close at 944 on Thursday on the back of the announcement.

Industry consolidation

Despite the collapse of the merger plan, Asahi said it still plans to come under Millea Holdings in March 2004, to be formed in April by Tokio Marine and Nichido Fire and Marine Insurance Co.

Asahi Mutual President Yuzuru Fujita also said his company is expecting an injection of funds worth 100 billion yen ($753.3 million) from Dai-Ichi Kangyo Bank (DKB) and other group financial firms.

Japanese life insurers are struggling with recession, rock-bottom interest rates, a sagging stock market, and a series of corporate failures that have led to policy cancellations and negative spreads.

As a result, the sector has seen a string of mergers and alliances among life insurance firms in an effort to survive.

Meiji Life Insurance Co and Yasuda Mututal Lufe Insurance agreed to merge to form Japan's third largest life insurance group, which analysts said could spur further industry consolidation.