Dai-ichi Life Plans 2016 Acquisitions Via Protective Life, President Says
December 30 2015 - 1:35AM
Dow Jones News
By Kosaku Narioka
TOKYO--Dai-ichi Life Insurance Co. (8750.TO) plans to step up
acquisitions in 2016, using its $5.6 billion purchase of Protective
Life Corp. as a springboard and giving more decision power to
managers outside Japan, Dai-ichi's president said.
Dai-ichi Life was quicker than many Japanese insurance firms to
push into overseas markets, having purchased life-insurance
companies in Vietnam in 2007 and Australia in 2011. In February
2015, it completed the purchase of Alabama-based Protective
Life.
Now Dai-ichi, Japan's second-largest life insurer by annual
revenue after state-controlled Japan Post Insurance Co., is looking
to expand further in the U.S. and Southeast Asia, said President
Koichiro Watanabe.
Mr. Watanabe said Protective's acquisition experience and its
access to U.S. dollar funding give the company an edge over
Japanese rivals that have also been on a buying spree abroad
recently. After the Protective deal was announced in June 2014, the
yen fell sharply against the dollar, making deals harder for
Japanese buyers that are shopping with yen.
"Even at the current exchange rate, we can continue M&A in
the U.S. market," Mr. Watanabe said in an interview.
He said the favorable foreign exchange rate Dai-ichi secured in
the acquisition of Protective largely offset the premium it paid.
The yen has weakened 14% against the dollar since the purchase
agreement.
Protective's net income is projected to nearly double to roughly
$400 million in the year ending March 2018 compared to the current
fiscal year, according to Dai-ichi.
In October, Protective agreed to buy blocks of term-life
policies from Genworth Financial Inc. for about $661 million
through a reinsurance transaction, the first acquisition for
Protective under Dai-ichi.
Dai-ichi plans to set up a holding-company structure in October
2016 under which Tokyo headquarters will delegate more power to
North American and Asian regional heads.
Outside of the U.S., Mr. Watanabe said Southeast Asian countries
would be more realistic destinations for mergers than China, where
foreign firms' penetration is limited. He also said the timing
probably isn't right for Europe because he believes the continent
is on the verge of deflation. He said Southeast Asian companies in
which Dai-ichi has invested have increased their revenue despite
negative effects from currency fluctuations.
Dai-ichi also sees the asset-management business as a growth
area. The insurer and Japan's Mizuho Financial Group Inc. (8411.TO)
plan to integrate their asset management functions in the coming
year to establish one of Japan's largest asset managers with some
50 trillion yen ($415 billion) of assets under management.
Write to Kosaku Narioka at kosaku.narioka@wsj.com
(END) Dow Jones Newswires
December 30, 2015 01:20 ET (06:20 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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