Nippon Life Insurance Co [NPNLI.UL] is looking for acquisition targets both in developed and emerging markets, including asset managers in the United States, as the domestic-focused insurer seeks to diversify sources of income.
Nippon Life's growing interest in overseas insurers and asset management comes as Japanese life insurers face diminishing returns from Japanese government bond (JGB) investment and weak prospects in their mainstay death benefit insurance sales.
Massive monetary policy easing by the Bank of Japan, aimed at stimulating economic growth, has pushed down yields on safe-bet JGBs, which make up the bulk of their investment portfolio. At the same time, a decline in the working-age population has reduced demand for once-lucrative death coverage.
"We don't limit (acquisition targets) to particular geographic areas," Nippon Life President Yoshinobu Tsutsui said in an interview on Friday. "We will have geographic diversity."
Japan's largest private-sector life insurer also aims to expand its small global asset management business through acquisitions, with a consideration being small, boutique-type asset managers in the United States specializing in particular asset classes.
"There are many unique asset management companies in the United States, small but unique. We are thinking about these firms," he said "I don't think we have a shot at huge ones."
In its three-year business plan announced last month, Nippon Life said it may use up to 1.5 trillion yen ($12.4 billion) for investment and acquisitions at home and abroad over the next 10 years, to raise earnings outside its domestic insurance base by 10 times over the next decade.
Compared with Japanese rivals, the company has been cautious in overseas expansion, with investment in foreign insurers limited to minority stakes. But Tsutsui said, depending on targets, the company would buy majority stakes.
"We would like to be in a different phase in the next three years."
Tsutsui also said Nippon Life, with an investment portfolio some 60 trillion yen in size, is likely to increase investment in foreign bonds in the current financial year started April 1.
"We are trying to make a shift in our portfolio from one dependent on JGBs to one which is not."
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