Yamato Life in Japan Files for Bankruptcy, Citing Bad Investments

October 10, 2008 by · Leave a Comment
Filed under: Global News 

Well this is not a U.S. crisis or a OECD crisis but a global crisis. We will see more failures in all markets as this global de-leveraging is taking place. The other option is we could see world governments doing more to intervene in the markets and prop up these insolvent institutions and in turn that would make the problem more acute. It would be more acute because the more you change the rules during the game the more people will not want to participate and will just withdraw there assets into cash and wait on the sidelines till they know there is more certainty.

News Release:

Yamato Life Insurance Co., a 98- year-old Japanese insurer, filed for court protection from creditors in the nation’s first bankruptcy in the industry in seven years, with debts exceeding assets by 11.5 billion yen ($116 million).

A decline in the value of securities holdings widened losses at the Tokyo-based company, whose debts total 269.5 billion yen, as value of its investments widened amid the global market meltdown, Yamato Life said at a press briefing in Tokyo.

The global credit crisis sparked by the U.S. subprime collapse has wiped out more than $670 billion in market value from the Tokyo Stock Exchange’s first section this week as investors flee equities. The collapse of closely held Yamato is the eighth by a Japanese life insurer since World War II, and the fifth largest this year, according to Teikoku Databank Ltd.

“The fact that insurers are starting to struggle with their investments is a harbinger that even pension funds may start to suffer given the market environment,” said Tetsuo Inoue, chief strategist at Proud Asset Management Japan Co. in Tokyo. “It’s a tough situation.”

The last collapse by a Japanese life insurer was in 2001, when Tokyo Mutual Life Insurance Co. filed for protection from creditors with debts of 980 billion yen. Kyoei Life Insurance Co. filed for protection in 2000 in Japan’s biggest postwar corporate collapse, with debts of 4.5 trillion yen.

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