Tokio Marine & Fire Insurance Co., Nichido Fire & Marine Insurance Co. and Asahi Mutual Life Insurance Co. are planning to form a comprehensive tieup with a view to integrating their operations in the future, company sources said Thursday.
If it goes ahead, the three-way alliance would be Japan’s largest comprehensive insurance group, with combined assets of 19 trillion yen, and could trigger another wave of reconsolidation in the nation’s insurance market.
The tieup, expected to be formally announced early next week, would also cross corporate group lines, since Tokio Marine is part of the Mitsubishi group and Asahi Mutual and Nichido Fire are members of the Mizuho Financial Group. The latter is to be set up later this month through the integration of Dai-Ichi Kangyo Bank, Fuji Bank and the Industrial Bank of Japan.
Sources close to the talks added that the alliance may be expanded to also include Meiji Life Insurance Co. of the Mitsubishi group of companies.
The plan comes just as the Bank of Tokyo-Mitsubishi and Mitsubishi Trust & Banking Corp. are preparing to consolidate under a single holding company by April 2001.
By allying with Nichido Fire, which is close to Fuji Bank, and Asahi Mutual, which is close to DKB, Tokio Marine would defy the direction set by Tokyo-Mitsubishi and the conventional style of consolidation within the sector. So far, successful talks of tieups between insurance companies have occurred along lines set by bank alliances.
Both Nichido Fire, the seventh-largest nonlife insurer, and Asahi Mutual had been somewhat left behind within the Mizuho group after Dai-ichi Mutual Life Insurance Co. and Fuji Bank-affiliated Yasuda Fire & Marine Insurance Co. announced their partnership in late August.
Meanwhile, the Daiichi-Yasuda alliance posed a threat to Tokio Marine’s place as leader of the nonlife insurance sector, observers say.
According to company officials, Tokio Marine will sell Asahi Mutual’s products at its 69,000 offices nationwide, while Asahi Mutual’s 22,000 sales representatives will sell Tokio Marine’s nonlife insurance products.
They said that the three firms plan to form a holding company and to consolidate operations in three to five years.
They will also cooperate in the joint development and marketing of so-called third-sector products — insurance products that do not fall into the conventional categories of life and property insurance, such as medical, nursing care and cancer insurance.
Both moves are in response to financial deregulation measures. A ban that prevents major Japanese insurers from directly selling third-sector products will be lifted in January, while the Financial Services Agency lifted in mid-August a ban on life insurers cooperating with nonlife insurance firms in marketing each other’s products.
Officials refused to elaborate on the ongoing talks, saying the details of the alliance have yet to be finalized.
“A tieup is under consideration, but no formal decision has been made at this time,” Tokio Marine said in a statement.
But officials said the increasingly competitive nature of the market had prompted it to consider business tieups with other companies.
In a separate statement, Asahi Mutual said no decision or agreement had been reached, but added it is looking into “a wide range of possibilities, as before.”
Tokio Marine is the nation’s top nonlife insurer, holding an estimated 18 percent of the market.
Last month, Dai-ichi Mutual Life Insurance Co. and Yasuda Fire & Marine Insurance Co. announced the nation’s first comprehensive tieup between a major life and nonlife insurer.
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