Morning Briefing: Nippon, Mitsui deal to shake up Japanese life market

Nippon, Mitsui deal to shake up Japanese life market
Two Japanese firms are to combine in a deal which will shake things up in the country’s life insurance market. Nippon Life Insurance Co. says it will buy Mitsui Life Insurance Co. in the first merger of major firms in 11 years. Reuters reports that Nippon is Japan’s largest privately-held life insurer with assets of around $513 billion while Mitsui has $61 billion. Analysts expect further consolidation of the Japanese insurance market both domestically and through foreign deals.
 
KPMG: Insurance megadeals face challenges
International auditing firm KPMG has released a report on the current wave of insurance industry megadeals and highlights some of the challenges they face. “Insurance 2020: On track for the payback, Realising megadeal potential” outlines the ways in which insurers can address the basics of deal-making in order to withstand the complexities and challenges of large acquisitions.

Those challenges include:

• The risk that deal strategy could become defined by size rather than suitability and fit.

• The possibility that a technology or telecommunications giant could seek to acquire an underwriting platform and ready-made market share to align with its own analytics and distribution capabilities.
• Sufficiency of deal strategies to face the heightened size and complexities of “megadeals”.
• Board challenges around competing in an increasingly consolidating marketplace.
• The risk that non participation in the current M&A wave could make companies vulnerable to takeover themselves.

KPMG’s James Tye noted that there has been an acceleration of megadeals in short period, especially in the P&C space: “The scale of recent transactions naturally creates potentially greater complexities and possible pitfalls.”
 
Insurance test facility opens $30 million expansion
The Insurance Institute for Highway Safety has opened an expanded facility allowing it to focus on crash avoidance year-round. The $30 million facility, made possible through member-funding, includes a showcase 5-acre covered track which will allow testing whatever the weather. The outdoor track has also been extended which gives the Vehicle Research Center in Ruckersville, Virginia a total of 15-acres of test track.

"Advanced technology that can prevent many kinds of crashes is the next frontier of auto safety," says the Chairman of the IIHS Board of Directors, Neal Menefee. "Insurers are proud to support IIHS as it expands its research programs and facilities to undertake new work that will make our roads safer."

The new emphasis on crash avoidance doesn't mean that IIHS will curtail its crashworthiness testing as it says vehicles still need improvement in this area.