Tokio Marine seeks acquisitions in Asia

Japan’s property/casualty insurer Tokio Marine is looking for acquisitions in Asia with a $9 billion war chest as potential deals in Europe and the US become expensive, Reuters reported citing CEO Tsuyoshi Nagano.

“We are building a stable business by diversifying geographically and operationally,” Nagano told Reuters.

“As overseas business profits are nearing ¥200 billion ($1.82 billion), we would like to raise the proportion of Asia (outside Japan) to 20 percent or more from less than 10 percent now,” Nagano said.

Tokio Marine, which recently said it was buying the Thai and Indonesian operations of Insurance Australia Group (IAG) for $390 million (A$525), is looking for more acquisition opportunities in Asia, Nagano said.

“We are always considering strategic options in countries like India, Indonesia, Thailand, Malaysia and the Philippines,” he noted.

“There are companies we have in mind, but it’s not easy, it will take time,” he said.

Nagano said the firm would have sufficient capital buffers even after spending ¥1 trillion ($9.13 billion) on acquisitions.

Tokio Marine could do another multi-billion US or European acquisition, but Nagano cautioned targets were becoming too expensive. “We have to be careful not to overpay.”

Tokio Marine has already spent more than $15 billion in the past decade to buy specialty and other insurance businesses in the US and elsewhere.

The insurer has made three big US purchases - specialty insurer HCC Insurance Holdings for $7.5 billion in 2015, Delphi Financial Group for $2.7 billion in 2012 and Philadelphia Consolidated Holding for $4.7 billion in 2008.

These deals are expected to account for nearly 80 percent of Tokio Marine’s overseas profits in the year to March 2019, the company said.

Overseas earnings will likely contribute 45 percent of the company’s total profits for the year.

Tokio Marine’s overseas profits came in at ¥145 billion in the year ended March 2018.

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