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Yasuda Fire & Marine Insurance Co., the nation’s third-largest nonlife insurer in terms of assets, is in final talks to turn Saison Automobile & Fire Insurance Co. into an affiliate, Yasuda Marine said Friday.

Faced with stagnating profits and increasing competition, alliances are booming and the industry has hastily realigned into five major nonlife groups, dominating 85 percent of the market.

Under the plan being discussed, Yasuda Fire will take at least a 33.4 percent stake in Saison Automobile by the 2004 business year, allowing Yasuda Fire veto power at shareholders meetings. Saison Automobile would gain Yasuda Fire’s expertise in product development and sales, while Yasuda Fire would gain access to Credit Saison Co. group’s 13 million card holders.

A formal decision on the tieup is expected by the end of this month.

Yasuda Fire is also set to merge with Nissan Fire & Marine Insurance Co. in July.

As competition intensifies, insurers are pumping more of their earnings into product development in the hope of coming up with unique policies to differentiate their company. Small insurers, however, don’t have the critical mass needed to sustain both product development expenditures and profits.

Saison Automobile has been carving a niche in overseas travel injury insurance products, through a tieup with discount travel agency H.I.S. Co.

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