LIFE ASSURERS’ DISCLOSURES PUT PRICING UNDER PRESSURE

The decision by life assurers to release a more detailed breakdown of their earnings sources, in the wake of damaging scandals relating to mispayments, could lead to the companies coming under pressure to return more of their earnings to policyholders, reports Asahi Shimbun today, citing unnamed analysts. Japan’s 13 life assurers posted combined core operating profits of ¥2.4tn for fiscal 2005, up 6% year on year. The breakdown revealed that much of the profit came from a difference between actual and projected benefit payouts, more than offsetting the negative difference between projected and actual investment returns. Dai-ichi Mutual, for example, lost about ¥122bn on investment returns not matching the levels previously promised to policyholder/savers, but gained ¥469m because fewer people than had been expected were dying. The company said that it would be retaining ¥220bn to bolster its capital base and returning ¥112bn to policyholders. Similar figures were revealed at Nippon Life, where a loss of ¥150bn on the investment side was counterbalanced by a ¥580bn gain on lower than expected mortality. It said that it would be setting aside ¥180bn for dividend payments. Analysts said that if profits on mortality levels continued at this rate, there would be a downward pressure on premium levels for new policies.