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TAISEI F&M FAILS ON SEPT ATTACKS IN U.S.


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Posted by tonyb on November 26, 2001 at 03:07:45:

TAISEI F&M FAILS ON SEPT ATTACKS IN U.S.

By Chikako Mogi

TOKYO, Nov 22 (Reuters) - Mid-sized Japanese non-life insurer Taisei Fire & Marine Insurance
Co Ltd on Thursday became the first publicly traded Asian firm in the industry to fail because of
payments related to the September attacks in the United States. Taisei's failure comes as the
insurance industry worldwide takes a significant hit on its earnings with insurance payments on
the rise and no cap seen for the time being. Analysts saw Taisei as an isolated case because of
its market size of less than 1.5 percent in Japan and its huge exposure to a single U.S. aviation
reinsurance agency, North Carolina-based Fortress Re. ``I don't think we are going to see losses
cascading through the sector,'' saidDavid Threadgold at ING Baring.

``Fortress Re caught a very bad cold with five airliners, including the one in Queens, going down
in the space of two months.'' Analysts said the attacks were the last push Taisei needed to go
over the edge given its already-weakened financial base. But industry confidence may be
shaken as Taisei highlights a lack of proper risk management by non-life insurers, they said.
Compared with banks, ``they have reported very high solvency ratios so we thought they would
be able to weather through but this really indicates the poor risk management of the non-life
insurers,'' said Kristine Li at Lehman Brothers.

'COULDN'T BE HELPED' - Taisei President Ichiro Ozawa told a news conference the firm had
insurance payments of 74.4 billion yen ($603.8 million) related to the attacks and its excess
debts totalled 39.8 billion yen. Its total debts stood at 413.1 billion yen. It filed for court
protection from creditors earlier in the day, becoming the fourth Japanese insurer to go under
since October last year. ``I feel the responsibility but it was unforeseeable,'' Ozawa said. ``You
might say I lacked foresight, but it couldn't be helped.''

Shares in Taisei, due to be delisted from the Tokyo Stock Exchange on February 23, were
suspended from Thursday. They ended at 400 yen on Wednesday. Taisei had planned to
merge with Yasuda Fire & Marine Insurance Co Ltd and Nissan Fire & Marine Insurance Co Ltd
to form Sompo Japan in April, which would have been Japan's second-largest non-life insurer.
That merger would still take place but could be delayed by Taisei's failure, Yasuda Fire said.

Ozawa said both those companies -- Yasuda and Nissan -- had expressed continued support in
sorting out insurance payments owed by Taisei. It said it would cooperate with Nissan to take
over the protection of Taisei's policyholders, its employees and distribution networks as far as
possible. As the non-life insurance sector struggles to survive in a rapidly consolidating and
fiercely competitive environment, some firms have revised their earnings forecasts lower.
($1=123.22 Yen)

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