Tokyo, Jan 25 (Kyodo) The Financial Services Agency isplanning to introduce a consolidated solvency margin standardfor insurance firms in Japan in the fiscal year through March2012, sources close to the matter said.
Japan is expected to become the first country to regulatethe indicator of financial strength against risks at life andnonlife insurers on a consolidated basis covering allsubsidiaries, they said.
Japan has already introduced an unconsolidated solvencymargin standard. If the margin drops below a certain level,insurers will be ordered to take corrective measures.
The FSA will soon publish a detailed proposal on the newstandard and solicit comments from insurers before itsintroduction in fiscal 2011, the sources said yesterday.
The idea of consolidated solvency margin regulations hasemerged since US insurance giant American International GroupInc plunged into financial crisis in 2008.
The FSA envisions that the consolidated standardregulations will cover Japanese insurers'' insurance andnon-insurance business subsidiaries at home and abroad inprinciple.
As Japanese insurers have expanded abroad, regulationscovering their overseas subsidiaries have grown in importance.
The consolidated standard is expected to encourage insurancecompanies to quickly identify risks at domestic and overseassubsidiaries.
The International Association of Insurance Supervisorshas been considering group solvency margin regulations in abid to put forward a draft framework by 2013.
The European Union is also planning to introduceconsolidated solvency margin regulations. (Kyodo)