Japan Rocked as Another Life Insurer Fails

The Japanese government’s top financial regulator moved quickly to calm nerves Friday after Japan’s 11th-largest life insurer became the country’s biggest corporate failure since the end of World War II.

“I haven’t heard of any other life insurers that are in trouble,” Hideyuki Aizawa, chief of Japan’s Financial Reconstruction Commission, told reporters shortly after Kyoei Life Insurance Co. filed for protection from its creditors.

The latest failure to rock corporate Japan came less than two weeks after another mid-size insurer, Chiyoda Mutual Life Insurance Co., filed for bankruptcy protection.

Founded in 1935, Kyoei has more than 13,000 employees. Its total assets of $42.4 billion made it the largest company to fail in postwar Japan, according to the credit research firm Teikoku Databank.

Chiyoda Mutual, which had assets of $32.3 billion, ranks as the second-largest bankruptcy.

Japan’s insurance companies have been hurt by falling interest rates, which have left them earning less on their assets than they are paying out to customers holding interest-bearing policies as investments.

Kyoei had total debts of $41.7 billion as of the end of its last fiscal year in March.

Its finances had continued to deteriorate since then, and were dealt a heavy blow by Chiyoda’s bankruptcy this month, which prompted policy holders in many smaller insurance companies to scramble to cancel their contracts.

Kyoei’s plight sent a chill through Japan’s financial markets. The benchmark Nikkei stock average, which had risen more than 3% in morning trading, lost ground and finished up only 2.6% at 15,198.73.