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Insolvency of Life Insurance Companies in Japan (12) |
Some companies fell into the bad business results around 1990. The main reasons were decrease of incomes and increase of expenditures. Premium incomes were enormousely decreased because of the newly revised premium ratio, an amount of decrease of selling of Endowment Insurance of Payment in Lump Sum" and personal pension insurance schemes affiliated with local banks. And incomes from fund managements also decreased after 1992 fiscal year. In contrast with decrease of incomes, expenditures of claim paid and cash surrender value increased in a great deal. Against these bad sircumstances, life insurance companies took the way to use latent asseets. Therefore the latent assete were dried up under the bad circumstance of stock market. Along with some mesures against insolvency, the new institute aimed to protect policy-holders were established as stated previous article. And in spite of desperate efforts for evading insolvency, seven life insurance companies became insolvency. Author point out three features for life insurance companies which became insolvent as follows. (1) A great deal of Endowment Insurance Payment in Lump Some" were sold during the latter half of 1980s, which were the period of so called bubble economy. (2) A great deal of liquid assets flowed out through expenditure of cash surrender value. This brought the risk of insolvency. (3) Distrust for life insurance business were expanded among the people.
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St. Andrew's University economic and business review |
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48(3) pp.71-89 2006-11-10 |
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