Japanese insurer MS&AD Insurance Group has announced that it will invest US$400m in Australian financial services firm Challenger.

The insurance giant will take a 6.3% stake in the listed life insurance and funds management business as the international business looks to diversify into the Australian annuity insurance market.

In a statement, MS&AD said that the annuity market in Australia “is expected to enjoy a significant growth in the years to come” due to an aging population, increase in the number of retirees and thanks to mandated superannuation contributions as Challenger is currently the largest provider of individual annuity insurance in the country.

“By incorporating the annuity insurance business in Australia, which shows growth potential, we will seek to achieve further diversification of risk in the business portfolio of the MS&AD Insurance Group,” the statement said.

MS&AD note that they will look to increase their holding in the Australian firm to 10% over the next 12 months but reserves the right to change its intentions and acquire, dispose and vote Challenger shares as it sees fit.

“Through the investment in, and business alliance with, Challenger and personnel exchange associated with the foregoing, we will seek to build a long-term strategic relationship with Challenger and work to bring growth opportunities on a group-wide basis by harnessing its know-how, network and other strengths,” the statement continues.

Japanese insurers have long been rumoured to be pursing targets within Australia as other firms from the country, such as Nippon Life Insurance and Dai-ichi Life, have already entered the fray.


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