Mitsui Sumitomo Insurance Co. said Tuesday it is in talks with Aviva PLC to purchase the major British insurer's nonlife operations in Asia.
"We expect an agreement to be struck shortly," a spokesman for Japan's third-largest insurer said.
The proposed acquisition would cost an estimated 50 billion yen, according to sources. It would enable Mitsui Sumitomo, which posts annual net premium revenue of 1.2 trillion yen in Japan alone, to expand its operations in Asia, including Hong Kong and Malaysia.
Mitsui Sumitomo annually generates more than 40 billion yen from its Asian operations, spokesman Ichiro Yamane said. He indicated the acquisition would help the company add a further 30 billion yen in revenue from Asia.
The two insurers "need to produce an agreement concerning the value of the proposed acquisition transaction" before they can press ahead with signing the deal, Yamane said.
But it remains unclear whether the deal will be inked by the end of this year, according to the spokesman.
Faced with anemic demand in the matured and competitive Japanese market, Mitsui Sumitomo and its Japanese rivals have been seeking to make inroads into growing Asian markets.
Aviva, the world's fifth-largest insurer with 6 trillion yen worth of premium revenues in the last fiscal year, has decided to withdraw from the nonlife business in the Asia-Pacific region.