Japan’s MS&AD Planning on Insurance Acquisitions for Growth in Southeast Asia

MS&AD Insurance Group Holdings Inc., Japan’s largest non-life insurer, will seek acquisitions in Southeast Asia to expand its overseas business, said President and Chief Executive Officer Yasuyoshi Karasawa.

“Asia continues to be the most important area for us,” Karasawa, 63, who became the insurer’s president yesterday, said in an interview in Tokyo. “We will be active on mergers and acquisitions for both casualty and life insurance businesses.”

The Tokyo-based insurer will target countries in the 10- member Association of Southeast Asian Nations, or Asean, which includes Indonesia, Thailand, Malaysia, Singapore, Brunei, the Philippines, Cambodia, Laos, Myanmar and Vietnam, Karasawa said. MS&AD wants to become at least the fifth-largest insurer based on premium income in every country in the region, he said.

MS&AD joins other Japanese insurers that are lured by the region’s growth potential as they grapple with an aging society and shrinking population at home. MS&AD expects premium income from overseas casualty insurance businesses to increase 49 percent to 550 billion yen ($5.4 billion) in the four years from March this year, according to its business plan released this month. The target figure doesn’t include benefits from potential mergers and acquisitions, Karasawa said.

Since the start of 2012, $9.5 billion of insurance acquisitions have been announced in the region, almost triple the $3.6 billion between 2009 and 2011, according to data compiled by Bloomberg.
Indonesia, Vietnam
The insurer plans to strengthen its existing businesses in Indonesia and Vietnam, he said. MS&AD ranks ninth in Indonesia and 15th in Vietnam. It is second in Malaysia, third in the Philippines and forth in Thailand and Singapore, according to the company.

Beyond Asia, MS&AD wants to be in the top 10 premium income earners in Lloyd’s of London’s insurance market through mergers and acquisitions, Karasawa said. The insurer profited 3 billion yen from the business in the year ended December 2013, and ranks 23rd out of 91 companies in that market, he said.

MS&AD entered into the world’s oldest insurance market on their own in 2000, while smaller competitors, Tokio Marine Holdings Inc. and NKSJ Holdings Inc. did so by acquiring existing participants in the market.

–With assistance from Joyce Koh in Singapore.