Tokio Marine Weighs More Than $10 Billion of International M&A

Tokio Marine Holdings Inc., Japan’s top property and casualty insurer, could spend more than $10 billion on acquisitions to boost its international business, according to Brad Irick, who co-heads the unit.

The firm, which generates about 80% of its overseas profits in the US, aims to bring that figure closer to 70% for all of North America in the medium term, Irick said in an interview. The company intends to finance the effort with part of the proceeds from the unwinding of so-called cross-shareholdings with other Japanese firms, which has $25 billion of market value, he said.

“It’s a generational opportunity to take that capital that’s being freed up and put it into long-term, sustainable enterprise value-creating businesses for the next many years,” Irick said.

Tokio Marine Chief Executive Officer Masahiro Koike, who took the helm in June, has made international expansion a priority to diversify the business’s footprint outside Japan.

The insurer is weighing expansion in Latin America and Southeast Asia, aiming to bring their share of Tokio Marine’s international profit to 10% and 15%, respectively, from about 6% each today. Expansion in those areas would rely on the acquisition of small providers of personal insurance, as well as the marketing of specialty lines, which aren’t widely used in those geographies.

Tokio Marine is also seeking to boost its specialty insurance operations in Australia, either through bolt-on deals or larger transactions. Insurance Australia Group Ltd., QBE Insurance Group Ltd. and Suncorp Group Ltd. are the main local players.

In Africa, Tokio Marine would rather explore increasing its 22.5% stake in Hollard Group, rather than making other acquisitions, Irick said.

The insurer still has growth ambitions for the US, where it intends to focus on smaller acquisitions, in part because larger opportunities would likely overlap with its existing local businesses. Still, with just 2% of the commercial lines business, Tokio Marine has enough room to grow, and Irick said he wouldn’t rule out a larger transaction in the future.

Photograph: Signage for Tokio Marine Group outside the Tokiwabashi Tower building, which houses the Tokio Marine Holdings Inc. headquarters, in Tokyo, Japan, on Friday, Jan. 19, 2024. Photo credit: Kiyoshi Ota/Bloomberg