Dai-ichi expands in Southeast Asia with Panin Life deal: source

TOKYO Fri May 24, 2013 7:10am EDT

The building of Panin Life is seen in Jakarta December 6, 2012. REUTERS/Supri

The building of Panin Life is seen in Jakarta December 6, 2012.

Credit: Reuters/Supri

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TOKYO (Reuters) - Japan's Dai-ichi Life Insurance Co Ltd (8750.T) has agreed to buy a 40 percent stake in Panin Life from the parent of the Indonesian insurer for around 30 billion yen ($295 million), a source with direct knowledge of the matter said.

The stake acquisition by one of Japan's top four life insurers is the latest in a string of deals by increasingly acquisitive Japanese firms. Dai-ichi said this month it plans to spend 300 billion yen on M&A deals in the next two years.

Pressure to break into new markets has been especially heavy on Dai-ichi Life, the only listed company among Japan's big four life insurers, after failing in its bid for ING Groep NV's (ING.AS) insurance operations in Southeast Asia last year.

The Panin Life deal between Dai-ichi and PT Panin Financial Tbk (PNLF.JK) will take several more days before it is finalized, said the source, who declined to be identified because the talks are confidential.

A Dai-ichi Life spokesman declined to comment.

Dai-ichi is also among the companies that placed a bid for a controlling stake in the life insurance unit of Malaysian lender AMMB Holdings Bhd (AMMB.KL), another source with direct knowledge of the matter told Reuters earlier this month.

Dai-ichi already operates in Thailand and Vietnam.

The rapid economic growth and rising personal incomes in Southeast Asia have drawn Japanese insurers whose dim domestic prospects have pushed them to look overseas.

Just 5.8 percent of Asia's population is insured compared with 8.1 percent in the United States, and that is set to drive insurance premium sales in emerging Asia at nearly three times the growth in industrialized nations, Swiss Re says.

Insurance deals in Asia rose to a record $30.5 billion last year, according to S&P Capital IQ, and there is at least another $5 billion worth of deals in the pipeline.

Asian insurers trade at a median price-to-book (P/B) ratio of 1.73, according to Thomson Reuters data, nearly double their peers in the United States and Europe. Buyers have been willing to overlook the relatively expensive insurance stocks for the promise of fast growth.

Japan's MS&AD Insurance Group Holdings Inc (8725.T) paid a whopping 9.3 P/B multiple for a 50 percent stake in the insurance unit of Indonesian conglomerate PT Asuransi Jiwa Sinarmas.

In another Indonesia insurance deal brewing, PT Bank Negara Indonesia Persero Tbk PT (BNI) (BBNI.JK) has said it plans to sell a stake in its life insurance unit. ($1 = 101.4350 Japanese yen)

(Additional reporting by Clare Baldwin and Michael Flaherty in HONG KONG; Editing by Shinichi Saoshiro, Daniel Magnowski and Ryan Woo)

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