Yasuda Fire & Marine Insurance Co., Japan's No. 2 nonlife insurer, signed a basic agreement Thursday to merge with middle-tier insurers Nissan Fire & Marine Insurance Co. and Taisei Fire & Marine Insurance Co.
The merger, to take place in April 2002, will not endanger a tieup agreement that Yasuda has signed with Dai-ichi Mutual Life Insurance Co. to provide new life and property insurance products, officials said.
The three merging insurers aim to expand the 1.26 trillion yen in combined net premiums they posted for fiscal 1999 to 1.4 trillion yen in fiscal 2005, which is projected to equal a market share of 22.3 percent.
They also aim to raise their combined return-on-equity of 5 percent to more than 10 percent by consolidating sales offices and contracted agencies.
The new entity will also cut its sales force from 16,996 for fiscal 1999 to 13,000 by fiscal 2005, officials said. Combined with a consolidation of sales offices from 740 to 460, this will cut operating costs by roughly 54.1 billion yen, officials estimated.
During a news conference announcing the agreement, Yasuda President Koji Hirano said, "We will give top priority to ability (in making personnel decisions) for a staff with variety and energy."
"We cannot hope for the economy to grow quickly and we expect the market will expand only slightly, if at all," said Taisei President Ichiro Ozawa.
The merger is scheduled to be formally approved during a general shareholders' meeting in June.