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TOKYO: Nipponkoa, a unit of Japanese property and casualty insurer NKSJ Holdings, wants to make at least one overseas acquisition this financial year as part of a plan to expand in foreign markets, the company's new president said.
The deal may be in Western Europe or in the burgeoning Southeast Asian market, Masaya Futamiya — who became head of Nipponkoa on Thursday, June 23 — told Reuters in an interview.
"We will pursue future expansion in business scale in Southeast Asia, and in contrast we can expect to secure a stable profit base in Europe," said Futamiya, 59.
NKSJ, Japan's third-largest non-life insurer, was created last year through a merger between rival insurers Nipponkoa and Sompo Japan.
NKSJ and bigger rivals MS&AD Insurance and Tokio Marine have been stepping up efforts to find companies to buy, particularly in Asia, because of fewer opportunities in graying Japan's ¥8 trillion (RM302.3 billion) property-casualty market.
A rise in profit-squeezing payouts for car accidents has in part been blamed on the growing number of elderly drivers. Fewer young drivers and a decline in car ownership are also hurting profits.
Adding to pressure on Futamiya is a foreign spending spree by rival MS&AD, which in May agreed to buy a 50% stake in Indian life insurer PT Asuransi Jiwa Sinarmas for about ¥67 billion.
NKSJ has said it plans to spend ¥200 billion on acquisitions by March 2013. Non-life insurers Nipponkoa and Sompo Japan continue to operate as separate entities even after the merger under a holding company.
While Sompo Japan has acquired insurers in Turkey and Singapore, Nipponkoa, which recently set up a team to seek a foreign acquisition, has not yet made any major deals.
"We should not be spending too much time with no results. We would like to see a result by the end of the current financial year (next March 31) if possible," Futamiya said.
He said he is considering both life insurers and property-casualty insurers in markets where the firm already has operations such as Indonesia, and also in countries where it has yet to open an office.
Back at home, Nipponkoa may follow its rivals in raising premiums to guard against falling profits, Futamiya disclosed.
"We have been making various efforts, but as the sheer number of accidents is on the rise we need a proper adjustment of premium," he said. — Reuters
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