UPDATE: Tokio Marine To Buy Rest Of First Insurance Company Of Hawaii For $165 Million

Tokio Marine Holdings Inc. (8766.TO) said Thursday it will acquire the rest of First Insurance Company of Hawaii Ltd. for about $165 million (Y12.9 billion), the latest example of a Japanese company exploiting the strength of the yen to look for acquisitions overseas to help secure growth in the face of limited opportunities at home.

Japan's largest nonlife insurer by market value, which already owns a 50% stake in the Hawaii-based insurer, will acquire the rest of the company from the Continental Insurance Company, a unit of CNA Financial Corp. (CNA), after getting approval from regulators in the U.S. and Japan.

Tokio Marine, which first obtained a 40% stake in First Insurance in 1989 and boosted its ownership to 50% ten years later, said its brand and underwriting capacity will help the Tokyo firm boost its profitability and market share in the U.S.

First Insurance Company of Hawaii Ltd. is the second largest nonlife insurer by net premium revenue in Hawaii. Last year, the U.S. firm secured net premium revenue of about $135 million.

Tokio Marine has already made significant overseas acquisitions, buying U.K. insurer Kiln for about Y95 billion and U.S. Philadelphia Consolidated Holding Co. for $4.7 billion in 2008.

The move underscores how the nation's life insurance companies have been forced to look for growth opportunities abroad to offset the headwinds of a shrinking Japan population and a sluggish economy.

Rival property and casualty insurers have also been active in making overseas acquisitions. Last year, MS&AD Insurance Group Holdings Inc. (8725.TO) bought a 30% stake in Hong Leong Assurance Bhd. in Malaysia for about Y27 billion and NKSJ Holdings (8630.TO) acquired a majority stake in Turkey's Fiba Sigorta Anonim Sirketi for Y27 billion.

Separately, Tokyo Marine reported Thursday a 2.2% drop in group net profit in the April-June quarter in part due to weak revenue in fire insurance business.

The company posted a group net profit of Y55.14 billion in the quarter, down from Y56.41 billion in the same period a year earlier.

For the current fiscal year ending March, the nonlife insurer left its group net profit forecast unchanged at Y145 billion on revenue of Y3.35 trillion.

Tokio Marine bases its earnings on Japanese accounting standards.

-By Atsuko Fukase, Dow Jones Newswires; 813-6269-2792; [e-mail]