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Tokio Marine Holdings, one of the most acquisitive insurers in Japan, is on the hunt for deals in Asia and beyond, backed by a US$9 billion war chest.
Japanese insurers have been ramping up acquisitions in recent years, due to an aging population and rock-bottom interest rates in their home market. Increased exposures to natural catastrophes are also forcing insurers to diversify their businesses.
Tokio Marine, which is the largest property and casualty insurer in Japan in terms of market value, has spent over US$15 billion in acquiring insurance businesses across the globe, including the recent purchase of Insurance Australia Group’s Asian units.
“We are building a stable business by diversifying geographically and operationally,” Tokio Marine Holdings CEO Tsuyoshi Nagano told Reuters. “We are always considering strategic options in countries like India, Indonesia, Thailand, Malaysia, and the Philippines.”
Nagano added that Tokio Marine is looking to invest more in Asia, potentially doubling its share of the company’s overseas revenue. Due to their young population, rapid economic development, and low insurance penetration, Southeast Asian countries are popular expansion venues for insurers from more developed markets.
With Malaysia keen on reviewing its directive to cap foreign ownership of insurance companies, Tokio Marine and other insurers have more reasons to rejoice.
Aside from Asia, Tokio Marine will also pursue deals in the US and Europe, said Nagano.
In 2008, it bought Philadelphia Consolidated Holding for US$4.7 billion, followed by Delphi Financial Group for US$2.7 billion in 2012 and HCC Insurance Holdings for US$7.5 billion in 2015. These three deals are expected to bring in around 80% of Tokio Marine’s overseas profits for the year ending March 2019.
Despite having a huge appetite for acquisitions and a budget to match it, Nagano said that the group has not thrown caution to the wind.
“There are companies we have in mind, but it’s not easy, it will take time,” he said. “We have to be careful not to overpay.”
