Japan Warned On Rescue Proposal For Life Insurers.(policyholder payout reductions may result in downgrades from Standard and Poor's)(Brief Article)

National Underwriter Life & Health-Financial Services Edition, September, 2001 by Seol, Kap Su

In a preemptive strike on a proposal by a Japanese policy advisory board to allow life insurers in the country to cut their guaranteed yield payments to policyholders, Standard & Poor's, Tokyo, has warned that it would issue a downgrade, possibly to the point of declaring default, against any such move.

The Japanese government is considering the proposal made by the Financial System Council. The country's life insurance industry is trapped between rising policyholder claims payments and falling investment returns. "Major Japanese life insurers are paying an average of 3.5%-4% returns on outstanding policies while they earn about an average of 2%2.5% on their investments," says Runa Ichihari, analyst with S&P, Tokyo, in an interview with National Underwriter....

Read the rest of this article with a Free Trial at HighBeam Research.

Premium Content Partnership | HighBeam Research provides an in-depth online archive library of reference works.