Japanese insurers announce merger

Three of Japan’s major brands in non-life insurance, Mitsui Sumitomo Insurance Group Holdings, Aioi Insurance and Nissay Dowa General Insurance, have announced plans to merge operations in April 2010 in a bid to tackle the economic slowdown head-on. The merger is expected to result in the creation of a large regional insurance company to rival that of Tokio Marine Holdings, which is at present the biggest non-life player in Japan. Mitsui Sumitomo is currently the second biggest player by revenue; Aioi holds the fourth position and Nissay Dowa, the sixth. The country’s insurers are facing a major downturn in the demand for cover for cars and properties. The three insurance companies are also looking for alliances with other firms to improve their order book. They plan to team up with Toyota Motor Corp, which holds a 33% stake in Aioi. Another alliance under development involves Nippon Life Insurance, which owns 35% of Nissay, the three insurers said in a statement. The merged company also plans to use its alliance with Toyota and Nippon to expand outside Japan. The merged company will be branded under a “neutral” name, the statement said, although the name has yet to be publicly revealed. Under the arrangement, Aioi and Nissay will swap shares with Mitsui Sumitomo and merge into Mitsui Sumitomo.