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Japanese insurers are looking for merger and acquisition (M&A) targets in neighbouring Asian markets, including China, according to members of the insurance and banking sectors.
To offset stagnation in their home market, Japanese insurers have spent over US$50 billion in acquisitions over the past five years, Reuters reported. This has led to the Japanese insurance sector becoming the second-largest buyer of insurance assets globally.
Two major players, Nippon Life and Tokio Marine, recently announced that they are hunting for overseas deals, amid a global slowdown on insurance M&As.
With Beijing set to allow foreign entities to own majority stakes in insurance joint ventures, Japanese insurers will surely set their sights on their giant neighbouring market, which is now the third-largest in the world. Foreign companies can now fully own non-life insurance ventures in the country, with France’s AXA buying out the remaining 50% of shares in AXA Tianping Property & Casualty Insurance Company.
“Now finally with the easing of foreign shareholding, [Japanese insurers] would jump in,” Linda Sun-Mattison, an Asian insurance analyst at Bernstein, told Reuters. “China is probably the biggest opportunity in the life insurance sector.”
In anticipation of the move, Mitsui Sumitomo Insurance agreed to purchase Commonwealth Bank of Australia’s 37.5% stake in BoComm Life for U$477 million in May 2018. Meanwhile, bankers working with Japanese insurers said that more firms, such as Dai-ichi Life and Sompo, may be looking to follow suit.
China has also promised to abolish the foreign ownership limit in life insurance ventures in three years, which could also trigger another wave of investment.
