Tokio Marine acquires $328m stake in Hollard

Japan's property/casualty insurer Tokio Marine Holding has entered into a definitive agreement to acquire a 22.5 percent stake in South African insurer Hollard Holdings and Hollard International for 5 billion rand ($328 million) in cash and is looking for additional M&A targets.

Tokio Marine said the transaction will enable it to acquire a foothold in full-scale expansion to Sub-Saharan African market.

The two companies have already formed a partnership through various insurance arrangements in African countries for Japanese enterprises since February 2015, in addition to some life insurance joint project in Indonesia.

Tokio Marine said it has been focused on expanding its international business as the driving force of the group’s growth strategy. The group is aiming to pursue strategic M&A initiatives in both developed and emerging markets to achieve this objective.

"We aspire to significantly expand our business in these markets (emerging markets) with high growth potential through acceleration of our strategic M&A initiatives to achieve further diversification of our global portfolio, which is stated as one of the key initiatives of our current Mid-Term Business Plan “To Be a Good Company 2020” announced in May 2018." Tokio Marine said in a statement.

According to the Japanese insurer, the insurance market in Sub-Saharan African Countries is expected to significantly grow. By 2050, the population in Sub-Saharan African countries is expected to reach 2.2 billion, accounting for 1/4 of world population, and GDP is expected to quadruple.

"Given Tokio Marine’s limited presence and experience in the local market, we see it more prudent to explore the market through partnership with a local player rather than greenfield investment or 100 percent acquisition," the company said.

The acquisitions are expected to be completed in the end of 2018 or early 2019 subject to regulatory procedures required in the respective countries.

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