(January 19 – 09:20 ET) – Manulife Century, Manulife Financial’s Japanese subsidiary, has been chosen by the administrators of Daihyaku Mutual Life Insurance Co. of Japan to acquire Daihyaku’s existing insurance policies.

Assuming the transition goes ahead, Manulife Financial’s consolidated annualized premiums would increase by almost $2 billion and assets would grow by about $16 billion. A definitive agreement with the administrators is expected early next week.

The transfer of insurance policies is scheduled to occur on April 2, but is subject to the signing of a definitive agreement and regulatory approval in both Japan and Canada and approval by Daihyaku’s policyholders.

Daihyaku was Manulife Financial’s minority partner in the formation of Manulife Century in April 1999. In May 2000, the Japanese regulators suspended Daihyaku’s business because of the deterioration of its financial condition. Manulife Financial immediately expressed interest in acquiring the in-force policies. As part of the transaction, Manulife Financial would also acquire Daihyaku’s minority interest in Manulife Century making Manulife Century a wholly owned subsidiary of Manulife Financial.

The agreement will call for a restructuring of all policyholder entitlements including cash values and future crediting rates. The value of the obligation to policyholders assumed by Manulife Century at closing is estimated, under Japanese actuarial standards, at $18 billion.

The fair value of the assets to be transferred to Manulife at closing will amount to $16 billion including a contribution from the Life Insurance Policyholders Protection Corporation of Japan of approximately $1.9 billion (Yen 145 billion). Manulife Century will assume any remaining balance sheet deficiency.
IE Staff