Nippon Life Eyes Buying MassMutual Japan Unit for Bancassurance Sales: Sources

By | October 5, 2017

Japan’s biggest private-sector life insurer, Nippon Life Insurance Co., is in talks to buy a majority stake in the domestic unit of U.S.-based MassMutual Financial Group in an attempt to boost its bancassurance sales, two sources said.

Bancassurance, in which insurers use partner banks’ branch networks for distribution, has a minor presence in Japan, the world’s second-largest life insurance market, where policies have been mostly sold through an army of saleswomen who visit customers’ workplaces and houses to build rapport.

But a growing number of the younger generation, pressed for time, prefer to buy their policies that are recommended by specialists at bank branches where they go to do other transactions. MassMutual has well-established relationships with banks in Japan that Nippon is seeking to tap, with the deal.

The Nikkei business daily, which first reported the talks, said Nippon Life was likely to pay 100 billion yen to 200 billion yen ($887 million to $1.77 billion) for the stake in MassMutual Life Insurance Co. It was not immediately clear how much stake exactly Nippon wants to buy in MassMutual’s unit.

Nippon Life and MassMutual Life Insurance Co. declined to comment. The two people, who had knowledge of the negotiations, declined to be identified because they were not authorized to speak to media.

MassMutual’s Japan unit has about $25 billion in assets and had premium revenue of $2.86 billion for the year ended in March. The mid-sized insurer is known for its foreign currency-denominated products sold at bank branches.

Japanese insurers are already taking steps to embrace bancassurance. Nippon Life completed a $2.5 billion acquisition of smaller domestic rival Mitsui Life Insurance Co. last year to partly bolster sales through bank branch networks.

And rival Dai-ichi Life Holdings Inc. has been building distribution channels in addition to traditional door-to-door sales, setting up new insurance companies focused on selling products at bank branches and third-party insurance brokers.

The MassMutual unit is not the only target that Nippon Life is eyeing. Last week, Reuters reported the company was in talks to buy into U.S. investment company TCW Group.

Japanese insurers have been hit by diminishing returns from investments in Japanese government bonds and other securities amid the Bank of Japan’s massive stimulus measures, prompting them to seek riskier but higher-yield assets.

In an interview earlier this year, Nippon Life President Yoshinobu Tsutsui said his company was looking for acquisition opportunities for overseas asset management companies and lifeinsurers.

In October last year Nippon Life completed the acquisition of an 80 percent stake in National Australia Bank Ltd’s life insurance unit for A$2.2 billion ($1.72 billion).

($1 = 1.2773 Australian dollars) ($1 = 112.7900 yen) (Reporting by Taiga Uranaka; additional reporting by Makiko Yamazaki and Sam Nussey; editing by Muralikumar Anantharaman)

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