Dai-ichi Life Plans 2016 Acquisitions Via Protective Life, President Says

 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 [e-mail]

(END) Dow Jones Newswires

December 30, 2015 01:20 ET (06:20 GMT)

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