Sumitomo Life Buys BNI Insurance Unit Stake for $354 Million

Sumitomo Life Insurance Co., Japan’s fourth-biggest life insurer, agreed to buy a stake in PT Bank Negara Indonesia’s (BBNI) life insurance unit for about 36.2 billion yen ($354 million) as it expands abroad.

Sumitomo Life will buy about 40 percent of the Bank Negara Indonesia unit, according to a statement on the insurer’s website. BNI Life Insurance will issue new shares to Osaka-based Sumitomo Life, according to the statement.

“Indonesia is a growth market and it is likely that demand for products that Japanese insurers have expertise will increase going forward,” said Reina Tanaka, a credit analyst at Standard & Poor’s in Tokyo. “Still, given the size of Sumitomo Life, it’s not something that will contribute immediately to boost their credit rating.”

Japanese insurers, including Sumitomo Life’s bigger competitor Dai-ichi Life Insurance Co. (8750), are being lured by Southeast Asia’s growth outlook as they grapple with an aging society and shrinking population at home. Since the start of 2012, $7.6 billion of insurance acquisitions have been announced in the region, excluding today’s transaction, more than twice the $3.6 billion between 2009 and 2011, according to data compiled by Bloomberg.

Sumitomo Life, which is a mutual society owned by policyholders, agreed last December to buy an 18 percent stake in Bao Viet Holdings, Vietnam’s biggest insurer, for about 7.1 trillion dong ($336 million) from HSBC Holdings Plc.

Asean Outlook

The 10-member Association of Southeast Asian Nations, or Asean, includes Indonesia, Thailand, Malaysia, Singapore, Brunei, the Philippines, Cambodia, Laos, Myanmar and Vietnam. Formed in 1967, it has a combined gross domestic product of more than $1 trillion. Asean nations are expected to expand 5.6 percent in 2013, compared with 0.6 percent shrinkage in the euro area, the International Monetary Fund forecast July 9.

Japan’s 2010 population of 127 million was the world’s oldest and will shrink 17 percent by 2055, the fastest decline among developed economies, according to United Nations data.

Dai-ichi Life, Japan’s biggest publicly traded life insurer, agreed in June to buy a 40 percent stake in PT Panin Financial Tbk (PNLF)’s life insurance unit for about 3.3 trillion rupiah ($278 million). Dai-ichi plans to spend about $3 billion on overseas purchases in the next two years, Hideo Teramoto, the insurer’s managing executive officer said in May.

Meiji Yasuda Life Insurance Co., Japan’s third-biggest life insurer, agreed in July to buy a 15 percent stake in privately owned Thai Life Insurance Pcl to meet rising demand in the country.

To contact the reporters on this story: Tomoko Yamazaki in Singapore at tyamazaki@bloomberg.net; Komaki Ito in Tokyo at kito@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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