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Nippon Life Insurance Co. is poised to acquire an 85% stake in MassMutual Financial Group’s Japanese unit for around ¥104.2 billion (US$980 million) in a bid to strengthen its bancassurance channel.
The deal is par for the course in Japanese insurance, where firms are aggressively diversifying their sales channels beyond the traditional life insurance agent, reported Reuters.
Nippon Life, which is the largest private-sector life insurer in Japan, has around US$700 billion in assets. According to a statement by the company, it plans to finance the acquisition with cash, and expects the transaction to close in May or June, pending regulatory approval.
MassMutual’s Japanese arm has over ¥2.8 trillion (US$26.52 billion) in assets and annual premium revenue of ¥323 billion (US$3.06 billion). Its main market is the high net-worth sector, with most sales done through banks and stock brokerages.
Nippon Life’s investment in MassMutual comes as it tries to catch up with other insurers in the market, such as Dai-ichi Life, which is leading the pack in the bancassurance channel. In 2016, Nippon Life also bought Mitsui Life Insurance Company to boost its bank-based sales.
The Japanese insurance industry has been hit by weakening investment returns due to the Bank of Japan’s stimulus measures, forcing insurers to invest in riskier assets or pursue acquisitions to reach their growth targets.
