Nippon Life poised to buy MassMutual’s Japan business

Acquisition seen as a way for insurer to strengthen distribution capabilities

Nippon Life poised to buy MassMutual’s Japan business

Insurance News

By Gabriel Olano

Leading Japanese insurer Nippon Life Insurance is in late-stage talks to acquire a majority stake in US-based MassMutual’s Japanese operations. The transaction could be valued up to ¥200 billion (US$1.77 billion), according to reports.

MassMutual’s Japan subsidiary specialises in over-the-counter insurance sales, unlike most other insurers, which employ armies of insurance agents visiting homes and workplaces. Nippon Life wants to strengthen its over-the-counter distribution capabilities in order to catch up with Dai-ichi Life, a competitor which also focuses on this strategy, according to a report by Nikkei.

Nippon Life and MassMutual will study the deal’s terms very soon, and the firms aim to reach a final agreement before the fiscal year ends in March 2018.

If successful, this deal will be the first consolidation in Japan’s struggling life insurance market since 2015, when Nippon Life bought out Mitsui Life Insurance. With the market’s largest life insurer becoming active again in the acquisitions arena, more moves are expected to follow.

Yokohama Life Insurance, founded in 1907, was acquired and renamed by MassMutual in 2001. In 2004, it began selling insurance over-the-counter in banks, a channel also known as bancassurance.

Sales through bancassurance are dwindling due to the Bank of Japan's negative interest rate policy. From almost ¥7 trillion in fiscal 2015, the market’s value declined to around ¥4 trillion in the following year.

MassMutual Japan has also struggled, with premium income in the fiscal year ended March at ¥322.9 billion (US$2.86 billion), a 31% decrease from the previous fiscal year.

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Japanese life insurers’ revenue hit by sharp drop

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