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Friday, Dec. 7, 2007

EXPANDING FUNDS, M&A POWER

Dai-ichi Mutual Life to go public in 2010


Staff writer

Dai-ichi Mutual Life Insurance Co., one of Japan's leading life insurers, is planning to go public in early fiscal 2010, the company said Thursday.

If it becomes a stock company and is listed, the company's market value could reach as high as ¥3 trillion. It plans to sell more than ¥1 trillion worth of shares in the initial public offering.

Dai-ichi is now a mutual insurer, thus policyholders have ownership rights, including the ability to elect management. It currently has about 8.5 million policyholders with such rights.

"We plan to make the company a corporation, and we have begun a full-scale discussion on the topic," company spokesman Masumi Ishizuki said. "But we have not made any organizational decision yet."

However, he did confirm that Dai-ichi Mutual will aim to become a public company around April 2010.

Dai-ichi Mutual's decision is likely to push other life insurers into thinking about making the same move.

Smaller players, including Daido Life Insurance Co. and Mitsui Life Insurance Co., have already become stock firms, but Dai-ichi Mutual's move will be the first among the four biggest Japanese life insurers. Life insurance firms have suffered from sales drops due to depopulation and the rapid graying of society, prompting them to seek a new business model.

Dai-ichi Mutual has tried to diversify its business, including buying out an insurer in Vietnam. But to further expand through other means, such as mergers and acquisitions, the life insurer apparently decided that becoming a stock company is a must.

It is now difficult for Dai-ichi Mutual to carry out M&As, which often involve swapping stocks, because it is not a stock company.

The move would also reinforce Dai-ichi Mutual's corporate governance by having shareholders monitor its business. The mutual company structure is often criticized for not allowing policyholders to actually monitor management.

Some 8.5 million Dai-ichi Mutual policyholders will be given shares in accordance with the content of their insurance contracts. Their policies will not be affected by the insurer's shift to a stock company.

Once the company becomes a stock firm, the number of shareholders is likely to be around 3 million, more than NTT Corp., which currently has the most shareholders in Japan.



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The Japan Times

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