• Bloomberg


Dai-ichi Life Insurance Co. plans to expand in Asia to counter declining demand in Japan after its stock surged on debut in Tokyo in the world’s biggest initial public offering in two years.

The nation’s second-largest life insurer will concentrate particularly on China, where it has set up offices in Beijing and Shanghai and may start selling insurance by 2012, President Koichiro Watanabe said recently in Tokyo.

He aims to make Dai-ichi one of the top-10 listed global insurers by market value, by following the examples of U.S. and European rivals that demutualized and expanded globally.

Dai-ichi raised ¥1.01 trillion ($10.8 billion) in the world’s largest IPO since San Francisco-based Visa Inc. sold $19.7 billion in March 2008. The stock Friday rose 3.4 percent after surging 14 percent to ¥160,000 on its first day of trading on the Tokyo Stock Exchange Thursday.

“We want to aggressively expand our business in Asia, because there is a huge potential in the region for growth,” said Watanabe, 56, who took office Thursday as the new president. “Demutualization is an important step for us to take in achieving that goal.”

Premium income rose by 9.6 percent in Japan in 2008, compared with a 41 percent increase in China, according to Swiss Reinsurance Co. Insurance premiums accounted for 7.6 percent of Japan’s gross domestic product, compared with 2.2 percent in China, indicating room for further expansion in the country.

Dai-ichi shares advanced 1.56 percent to ¥162,500 on the TSE Friday.

Dai-ichi switched from mutual to stock-based ownership to expand fundraising options for acquisitions and partnerships as economic growth in Japan, the slowest market in Asia, compounds the problems of demographic stagnation.

The company sold 7.2 million shares at ¥140,000 each. The offering was the biggest in Japan since Tokyo-based NTT DoCoMo Inc. went public in 1998.

“The fact that it opened at 160,000 means that investors are quite bullish,” said Curtis Freeze, chairman of Honolulu-based Prospect Asset Management Inc., with $1 billion in assets. “I wouldn’t be surprised if the whole market starts going up in the back of it, and it looks like it is.”

In 2008, Dai-ichi agreed to pay 376 million Australian dollars ($345 million) to buy 30 percent of Tower Australia Group Ltd. to enter the nation’s insurance market, following expansion into Thailand, Taiwan, India and Vietnam.

The insurer, established in 1902, has set a midterm business goal of shifting to a holding-company structure in fiscal 2012, after using the first three years following the IPO to reorganize, Watanabe said. The insurer also aims to strengthen its accounting standards as the nation shifts to international standards, he said.

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