Yasuda Fire & Marine Insurance Co. and Nissan Fire & Marine Insurance Co. have completed their merger, creating Sompo Japan Insurance Inc.the country’s second largest p/c insurer after Millea Holdings Inc., the company formed by the merger of Tokio Marine and Nichido Fire & Marine last April.
The merger creates a company with net premium revenues of over 1 trillion yen (almost $10 billion), greater than Mitsui Sumitomo Insurance Co. — the country’s third-largest non-life insurer. It’s the latest big merger in the Japanese Insurance industry, which has been driven by the need to cut costs, and increase competitiveness.
The two companies have been in talks since their merger plans were first announced in October 2000. They had hoped to complete a three way- merger by April which would have included Taisei Fire & Marine Insurance Co. Unfortunately Taisei suffered a series of losses since the merger announcement from reinsurance operations and the Sept. 11 attacks, and has been forced into a bankruptcy reorganization. Plans now call for the company to become part of Sompo by the end of the year.
Standard & Poor’s immediately assigned its double-‘A’-minus financial strength and long-term credit ratings to the company with a negative outlook. “Sompo Japan accounts for approximately 18% of domestic direct premiums, based on the combined figures of Yasuda Fire and Nissan Fire in fiscal 2001 (ended March 2002),” said an S&P bulletin.
“The company also inherits a very solid franchise supported by a well-recognized brand name and an extensive distribution network. Sompo Japan is also engaged in cross-selling efforts with Himawari Life and Dai-Ichi Life Insurance Co., Japan’s second-largest life insurer, and thus is well positioned as a leading non-life insurer that can provide diversified insurance services to an extended customer base, it continued.
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