THE YASUDA FIRE AND MARINE INSURANCE COMPANY, LIMITED History

Company History:

Japan's oldest fire insurance company, The Yasuda Fire and Marine Insurance Company, Ltd., is a global leader in the non-life insurance industry. As its roots in fire and marine insurance diminished, Yasuda Fire expanded into automobile and personal insurance in the latter half of this century. The company's greatest growth, however, has come from its innovative maturity-refund-type insurance--policies that entitle the policyholder to a percentage of the amount insured upon maturity and offer dividends from the premiums. In addition, Yasuda Fire has developed comprehensive financial services. With these services, the company hopes to sustain its current international presence, as well as its leadership in the non-life insurance industry in Japan.

Tokyo Fire Insurance Company, Ltd. was established in 1887 as Japan's first fire insurance company. A merchant, Seisuke Yanagawa, developed the basic framework for the insurance company, but differences among the founders caused Yanagawa and other to leave the organization within the first year. Yanagawa, who later became a Buddhist priest, is considered to be its founder. Taketsura Yui became the first president. He was replaced in 1889 by Shosuke Orita.

The new company worked to cultivate an awareness of fire insurance, and five branch offices were added within a year. Fires themselves helped to spread awareness, but the Great Yokosuka Fire of 1890, which destroyed 830 homes, nearly toppled the young enterprise. Though Tokyo Fire's commitment to reimbursement generated credibility and more clients, it also resulted in debt. Tomoyuki Hayashi replaced President Orita, who stepped down after accepting responsibility for the consequences of the Yokosuka fire. Hayashi was followed by Norinago Ando, who used his personal assets to help the company when it covered losses from three more large fires in the 1890s, but financial restructuring became necessary.

A leading Japanese entrepreneur, Zenjiro Yasuda, accepted the challenge. Creator of the Yasuda zaibatsu a large financial group, he is considered the founder of present-day Fuji Bank and Yasuda Mutual Life Insurance Company. Between 1893 and World War I, Tokyo Fire grew steadily. In the economic fecundity following the Russo-Japanese War, competition within the fire insurance industry posed a problem. This difficulty was resolved in 1907 when Tokyo Fire joined four other leading companies to form the Fire Insurance Association, whose regulations would help manage competition. This period also marked the company's entry into the Chinese market.

Japan's economic prosperity during World War I extended to the fire insurance industry, generating still more competitors The postwar depression of 1920 and related industry slump, the death of Zenjiro Yasuda in 1921, and the Great Kanto Earthquake of 1923 left Tokyo Fire in dire condition. Government assistance was required by most insurance companies to meet costs incurred by the earthquake. By 1926, in an ailing world economy, Japan entered a major depression. The lifting of the gold embargo in 1930 caused a decline in property values that decreased premium income. The fire insurance industry saw many company failures or consolidations; in 1927, Daiichi Fire joined the Yasuda group because of business setbacks of their principal shareholders.

Under the leadership of Yasuda's son, Zennosuke, Tokyo Fire had begun hiring university graduates--an innovation at the time--and had expanded its policy-holder base beyond the previous Tokyo concentration. The company also expanded into Asia and Europe. In 1931, Tokyo Fire increased its insurance coverage to include personal accident, credit, burglary, automobile, and glass. In 1936, President Takafusa Shijo was succeeded by Kanji Minami, who was then vice president and an industry leader. Minami would later become chairman of The Joint Fire Insurance Association of Japan, while still president of Tokyo Fire.

The 1930s presented further challenges. A fire destroyed the Shirokiya department store in Tokyo in 1932. Two years later, all fire insurance claims records were broken by a huge fire in the port city of Hakodate. The Sino-Japanese War in 1937 brought an increase in business both in size of policies and in premiums paid. Unchecked competition among insurers continued.

Minami was succeeded by Suehiko Hayashi in 1939. Hayashi was then the vice president of Imperial Marine. As World War II escalated, the non-life insurance industry was stalled. Along with other companies, Tokyo Fire closed offices and halted European operations, moving instead into China, Southeast Asia, and the Pacific. The war also drained the industry of manpower. During World War II, Japan's insurance laws were extensively revised. These changes were implemented by 1940, giving the industry's minister considerable power. Non-life insurance firms, which had numbered 48 in 1940, were reduced to 34 by 1943. There were only 16 by the war's end.

The non-life insurance companies included in the Yasuda group were consolidated into two by 1943--Tokyo Fire and Imperial Marine. The following year, on the government's recommendation for merger, Tokyo Fire, Imperial Marine, and First Engine and Boiler joined to become Yasuda Fire and Marine Insurance Company, Ltd., under President Sotaro Tojura.

Imperial Marine was founded in 1893 by four men, one of whom was Zenjiro Yasuda. The company adopted a policy of low-risk, gradual growth. In 1918, Imperial Marine entered the fire insurance industry. Operations in this field, as well as the origins through Yasuda, brought the company into close contact with Tokyo Fire, including the sharing of a president and other top positions prior to their merger.

Founded in 1908, First Engine and Boiler Insurance Company, Ltd., was Japan's first insurance company to specialize in steam-boiler coverage. Although begun in the recession following the 1904-1905 Russo-Japanese War, the company enjoyed steady growth until steam boiler use was reduced by the spread of electricity in factories in the mid-1930s. First Engine was authorized in 1938 as the government-sanctioned inspector of boilers, which led to an increase in business, but the government advised the company to merge in 1943.

A massive earthquake in 1943, coupled with fear of air raids on the Japanese mainland, prompted regulation that placed the non-life insurance industry under the complete control of the wartime government. The law required war insurance to be added to fire insurance. Profits from the war insurance were given to the government, which covered all war claims.

After World War II ended in 1945, Yasuda Fire faced economic restructuring when the largest zaibatsu were broken up by the occupation authorities to end control of the Japanese economy by a relatively few families. This challenge was dwarfed by one other: Japan's devastation by war. Nearly one-fourth of the homes covered by Yasuda Fire had been burned or damaged, and fires continued for up to three years after the bombing had stopped. While claims mounted, the number of policies written declined. The marine insurance sector suffered similar difficulties; low insurance coverage was coupled with increasing repair costs.

During more than six years of Allied occupation, the Japanese non-life insurance industry was further regulated under antitrust laws and laws to encourage the development of labor unions. The industry established a rating association based on a U.S. model.

Yasuda Fire's second president, Bun-ichi Higaki, replaced Sotaro Tokura in 1949. Yasuda Fire's management group was then replaced by employees from within the company, further breaking ties with the Yasuda zaibatsu.

The Korean War began in 1950, and the resultant reconfiguration of powers led to the 1951 peace treaty between Japan and 48 countries, as well as the Japan-U.S.A. Security Treaty. The country then regained its independence.

During this time, Yasuda Fire concentrated on recovery along with the rest of the nation. Foreign operations were resumed in 1949. By 1953, company personnel were studying insurance systems abroad. Yasuda Fire also became a pioneer in the application of computer systems to the insurance process.

The country's economy had regained strength by 1955. Soon the automobile industry bloomed. The higher rate of traffic accidents led to compulsory auto liability insurance in 1956. Yasuda Fire, in efforts to hold down risks, did not initially participate in this growth area, although auto insurance would later become a major portion of its sales. Between

1955 and 1960, Yasuda Fire applied itself to real estate acquisitions, internal restructuring, capital building, and overseas operations. In 1959, a Yasuda operation commenced in Brazil, and a New York subsidiary was established in 1962.

Until 1963, when Takeo Miyoshi became president, fire insurance and casualty insurance were the largest source of premium income for Yasuda Fire. Under Miyoshi, the company changed its marketing policy to place prime emphasis on automobile insurance. In just over ten years, Yasuda Fire was at the top of the compulsory auto liability insurance industry.

In 1964 Japan joined the International Monetary Fund and the Organization for Economic Cooperation and Development. As a result, industry restraints were lifted and competition increased in the insurance industry. Yasuda Fire responded with increased marketing efforts and the development of new insurance product lines. A strong earthquake in 1964 prompted the company to develop earthquake coverage, offered two years later. In 1969 Yasuda Fire and other leading nonlife insurance companies introduced the sale of long-term comprehensive insurance based on a maturity-refund policy. The premium income in the first year of sales broke all records.

Yasuda Fire began the industry's first agent training system in 1971. The early 1970s also saw great expansions in the company's presence overseas, including Norway, Belgium, Southeast Asia, and Guam. Foreign premiums reached the ¥67.6 trillion mark by 1975.

President Miyoshi led a strategy he called "expansion and balance" during the 1970s, exemplified by the new company headquarters, completed in 1976, and the establishment that same year of the Yasuda Kasai Fine Art Foundation and the Seiji Togo Memorial Yasuda Kasai Museum of Art. Despite the two oil crises of that decade and related economic slowdown, Yasuda Fire increased its assets, which reached the ¥500 billion mark in 1977, and developed further its presence overseas with the establishment of a European and U.S. department.

Yasuda Fire embarked on the 1980s with fresh strategies and a structural overhaul. Strategies involved the expansion of markets, the balance of performance of insurance lines, and general efficiency. The organizational overhaul included a new legal department and more emphasis on public relations. After leading the company as president for 17 years, Miyoshi became chairman in 1980. Vice president Yasuo Miyatake took over the presidency. Office automation increased and policy innovations continued. By 1982, company assets had reached the ¥1 trillion mark. In 1983, Yasuo Goto assumed the presidency as the global recession induced by the oil crises began to abate. At this time, 30% of Yasuda Fire's assets came from its various maturity-refund insurance policies, making the management of those funds a high priority. Under Goto, the company moved toward financial services, additional forms of personal insurance such as long-term women's insurance, and greater computerization. In 1986, Yasuda Fire began marketing medical insurance.

The next year, the company topped the ¥2 trillion asset mark. Yasuda Fire observed its centennial with several cultural events, including the purchase in 1987 of Vincent van Gogh's masterpiece, Sunflowers. This purchase, at $39.9 million, tripled the previous record-high payment for a work of art. Yasuda Fire explained that van Gogh began the first of the seven Sunflowers in 1888, when the company started operations; only one painting of the series was destroyed--in the 1945 bombing of Nagasaki. This masterpiece was added to the collection of Yasuda Fire's art museum, which contains more than 600 works of art, including pieces by Pablo Picasso, Pierre Auguste Renoir, Paul Gauguin, and Grandma Moses. In 1988, the museum featured an exhibition of modern French painting on loan from Leningrad's Hermitage museum.

On the eve of its centennial, Yasuda Fire was the 2nd-largest non-life insurance company in Japan and the 15th-largest insurance organization. In 1988 and 1989, the company focused on global expansion and comprehensive financial services. There were overseas offices in 21 countries in 1989, and financing services were focused on small and mid-sized businesses and on individual clients.

Over its history, Yasuda Fire has shifted from insuring property to insuring people. The fire and marine policies on which it built its reputation, maintained through wars and natural disasters, were overtaken in the 1980s by automobile and personal accident insurance. The insurance line of maturity-refund insurance policies especially helped Yasuda Fire to attain its current position as a leader in the industry.

Principal Subsidiaries: Yasuda Building Management Co., Ltd.; Yasuda Kasai Information Technology Co., Ltd.; Yasuda Claims Research Co., Ltd.; Yasuda Agency Association Ltd.; The Yasuda Marine Service Co., Ltd.; Yasuda Business Service Co., Ltd.; The Yasuda Training and Planning Co., Ltd.; Yasuda Loan Service Co., Ltd.; Yasuda System Development Co. Ltd.; Yasuda Credit Card Co., Ltd.; Yasuda Career Bureau Co., Ltd.; The Yasuda International Investment Management Co., Ltd.; Yasuda Research Institute Co., Ltd.; Yasuda General Finance Co., Ltd.; Yasuda Credit Co., Ltd.; Yasuda Kasai International (U.S.A.), Inc.; Yasuda Kasai Realty, Ind. (U.S.A.); Yasuda Fire & Marine Insurance Company of America (U.S.A.); The Yasuda Fire & Marine Company of Europe Ltd. (U.K.); Yasuda Claims Limited (U.K.); PanFinancial Insurance Co., Ltd. (U.K.); The Yasuda Fire Investment (Europe) S.A. (Luxembourg); Companhia de Seguros America do Sul Yasuda (Brazil); The Yasuda Management Service Co. Ltd. (Bermuda); The Yasuda Fire Bahama Ltd.; William S.T. Lee Insurance Co., Ltd. (Hong Kong); The Yasuda Fire Asset Management Co., Ltd. (Hong Kong); The Yasuda Reinsurance Co., Ltd. (Hong Kong); P.T. Asuransi Yasuda Indonesia; People's Trans-East Asia Insurance Corporation (Philippines); Yasuda Management (Singapore) Private Limited; Yasuda International Services Co., Ltd. (Thailand); Yasuda Bahrain Kuwait Insurance Company (E.C.).

Further Reading:

The Yasuda Fire and Marine Insurance 1888-1988: A Century of Achievement, Tokyo, The Yasuda Fire and Marine Insurance Company, 1988.

Source: International Directory of Company Histories, Vol. 3. St. James Press, 1991.

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