Press Conference by the Minister for Financial Services

(Excerpt)

7 June, 2002

Q.

Life insurance companies have released their financial results for the term ending in March 2002. What is your view on their financial results, which turned out to be difficult?

A.

One of the factors behind life insurance companies' financial results is the returns on assets. The situation surrounding interest rate has completely changed, and interest rates have been hovering at a low level for a long time lately. When there is a negative disparity between the guaranteed rate of return to policyholders and the interest rate at which the insurance companies actually invest, this kind of negative spread occurs.

Another factor is the price of securities. There are reports that their situation is tough primarily due to the valuation loss.

However, with respect to policy cancellations and other factors, the situation appears to have generally settled down recently, even though some companies did face many policy cancellations at one point, as can be seen in the results of each company.