DAIHYAKU ORDERED TO HALT LIFE ASSURANCE OPERATIONS

Japan’s financial supervisory agency (FSA) has said that it has ordered Daihyaku Mutual Life Insurance, the country’s 15th-largest life assurer by assets, to halt its life assurance operations. Daihyaku, which sold most of its operations to Canada’s Manulife last year, has ¥45bn more liabilities than assets, Japan’s Jiji Press agency reported. The FSA confirmed that all of Daihyaku’s policy payouts would be guaranteed in full until next March. The suspension followed FSA warnings in March that Daihyaku had wrongly included subordinated loans in calculating its solvency margins — the latter having fallen below a key threshold of 200%. It is the third time in as many years that a Japanese life assurer has failed and the news prompted broader fears over the state of the national financial system. Finance minister Kiichi Miyazawa moved quickly to dampen these fears, saying that “I do not think it is on a scale that would have a big effect”.