Nippon Life Says $986 Million MassMutual Japan Deal Will Expand Group Business
March 6, 2018 by Best's News Service
TOKYO – Nippon Life Insurance Co. will acquire an 85.1% stake of MassMutual Japan, saying the estimated ¥104.2 billion ($986 million) cash deal should expand group and high-net-worth business and raise profits in an “ultra low-interest” rate environment.
The deal furthers MassMutual’s international growth plans by “capitalizing on global opportunities, through strategic partnerships and joint ventures,” MassMutual International Chairman, President and Chief Executive Officer Eddie Ahmed said in a statement.
MassMutual intends to have a close working relationship with Nippon Life and will enter into a strategic cooperation agreement “for exploring partnership opportunities,” spokesman Michael McNamara told Best’s News Service.
MassMutual will invest sale proceeds in existing or new business initiatives, he said. The time was right to sell the majority stake because MassMutual thought Nippon Life was a a “very attractive partner … This transaction enables us to develop a broader partnership with a leading global financial service firm — as well as a fellow mutual company,” he said.
Mitsuru Imoto would continue as president and chief executive officer of MassMutual Japan when it becomes a subsidiary of Nippon Life Group. Company headquarters will remain in Tokyo. MassMutual Japan has 60 front-line employees, said Nippon Life, primarily focused on asset management and inheritance consultation and sales.
It is the second major deal announced by MassMutual in Asia recently. August 2017, Alibaba-backed Yunfeng Financial Group and other investors agreed to acquire Hong Kong-based MassMutual Asia Ltd. for US$1.67 billion (Best’s News Service, Aug. 18, 2017). MassMutual will also hold a 24.8% stake in Yunfeng Financial. That deal is expected to close by the end of the year.
Nippon Life gains MassMutual Japan’s high net worth customers and network, along with a sales structure for securities companies and megabanks, according to company presentation on the pending acquisition.
Based on third quarter results, Nippon Life said group insurance premiums and other income of ¥4.05 trillion compared to ¥68.5 billion at MassMutual Japan. The group had total assets of ¥75.4 trillion, a core operating profit of ¥487.3 billion and a solvency margin ratio of 959.3%.
MassMutual Japan had total assets of ¥2.8 trillion, a ¥21.7 billion core operating profit and a solvency margin ratio of 911.1%.
Nippon Life is the leading insurance company in Japan with an 18% market share, based on direct premium income in 2016, according to an A.M. Best Credit Report. It has an extensive history as a mutual life insurer, offers a wide range of products focused on the domestic market, and has enhanced scale and diversity through acquisition, the report said.
MassMutual entered the market in Japan in 2001 by acquiring Aetna Heiwa Life Insurance Co., then the 19th largest life insurer in the country in terms of asset size, and re-branding it as Mutual Japan. It followed acquisitions in Hong Kong and Taiwan (Best’s News Service, Aug. 21, 2001).
Operating entities of Nippon Life Insurance Co. currently have a Best’s Financial Strength Rating of A+ (Superior) and A- (Excellent). Operating entities of Massachusetts Mutual Life Insurance Co. currently have a Best’s Financial Strength Rating of A++ (Superior).
(By Renée Kiriluk-Hill, associate editor, BestWeek: Renee.Kiriluk-Hill@ambest.com)
BN-NJ-3-2-2018 1457 ET #
