Nippon Life to Start a Tender Offer to Buy Mitsui Life

  • Nippon Life plans to begin buying shares as early as October
  • Japanese insurers announced $24.5 billion of M&A this year

Nippon Life Insurance Co., Japan’s biggest life insurer by assets, and Mitsui Life Insurance Co. agreed to merge as the nation’s insurance companies seek ways to counter slowing growth.

Nippon Life and Mitsui Life plan to finalize the deal by early November and complete the merger by March, according to a joint statement on Friday. Nippon Life plans to start a tender offer for Mitsui Life’s shares as early as October and eventually hold 85 percent of its rival, according to the statement. Details of the tender offer were not given. Neither company is publicly traded.

The acquisition is in contrast with a recent spate of multibillion-dollar takeovers abroad by Japanese insurers as the country’s aging population limits growth prospects at home. Excluding the Nippon Life deal, Japanese insurers have announced $24.5 billion of acquisitions this year, compared with $6.2 billion a year earlier, according to data compiled by Bloomberg.

“This is the first one as a result of our search in both domestic and overseas markets,” Yoshinobu Tsutsui, president of Nippon Life, said at a press conference in Tokyo Friday. “There is still a lot of potential in the domestic market. We decided to build a solid foundation in the domestic market first.”

By acquiring Mitsui Life, Osaka-based Nippon Life is positioning itself as the country’s biggest earner of insurance premium income ahead of Dai-ichi Life Insurance Co. Dai-ichi Life garnered 5.43 trillion yen from premiums in the year ended March. That compares with Nippon Life’s 5.37 trillion yen of premiums and Mitsui Life’s 545 billion yen during the same period.

Nippon Life plans to spend as much as 500 billion yen on acquisitions including overseas insurers and asset managers, according to a three-year business plan released in March. Previously, its strategy involved taking minority stakes in companies such as AIA Group Ltd. in Hong Kong, Indonesia’s Sequis Life and Reliance Group in India.

There have been $92 billion of insurance acquisitions announced globally this year, up from $33.9 billion the same period in 2014, the data show.

The companies also said in the joint statement that they have agreed not to change the trade name and brand of Mitsui Life.

“We have a mutual understanding and similar way of thinking on many points in regards to challenges ahead,” Shinya Arisue, president of Mitsui Life, said at the press conference. “We agreed on maintaining the autonomy, branding and employment of our staff.”

Earlier this week, MS&AD Insurance Group Holdings Inc. said it agreed to buy Lloyd’s of London insurer Amlin Plc for about 3.47 billion pounds ($5.4 billion) in its biggest acquisition. Last month, Sumitomo Life Insurance Co. agreed to buy Symetra Financial Corp. for about $3.8 billion. In July, Meiji Yasuda Life Insurance Co. announced the acquisition of StanCorp Financial Group Inc. for about $5 billion. Tokio Marine Holdings Inc. in June said it agreed to purchase HCC Insurance Holdings Inc. in the U.S. for about $7.5 billion in the biggest acquisition by a Japanese insurer.

With origins dating back to 1914, Tokyo-based Mitsui Life sells casualty insurance, group pension plans and annuities. It has 7.4 trillion yen in assets and more than 10,000 employees, according to its website.

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