TOKYO Feb 2 Mitsui Sumitomo Insurance, a unit of Japan's
largest property-casualty insurance firm MS&AD , said on Wednesday it
may buy a stake in Malaysia's Hong Leong Tokio Marine Takaful to tap growing
demand for Islamic insurance.
The move comes as its Japanese rival Tokio Marine & Nichido said it is
considering selling its 35 percent stake in the Islamic insurer to Hong Leong to
end its partnership over strategic differences. Tokio Marine & Nichido is a unit
of Tokio Marine Holdings .
Mitsui is keen to buy that stake, which would build up its presence in
Malaysia after its insurance alliance with Hong Leong Financial Group
worth $480 million last year, a company spokesman said.
The deal could be worth about 1-3 billion yen ($37 million), a source with
direct knowledge of the deal said.
HLA Holdings Sdn Bhd, which is part of Hong Leong Financial Group, owns the
remaining 65 percent of Hong Leong Tokio Marine Takaful, according to the
Islamic insurer's website.
Tokio Marine is expected to sell its stake in Hong Leong Tokio Marine to the
Malaysian shareholder which would then sell it on to Mitsui Sumitomo, both
pending regulatory approval, a source said.
Japan's Nikkei newspaper had earlier reported that Tokio Marine was planning
to exit its partnership in Hong Leong Tokio Marine due to differences in
business strategy. While Tokio Marine wants to sell a broad lineup of life and
non-life insurance, Hong Leong is keen to focus on savings-type policies, the
Mitsui Sumitomo has been looking to expand its overseas operations by
forging tie-ups with peers in emerging markets as Japan's non-life insurance
Mitsui Sumitomo Insurance managing executive officer Masaaki Nishikata told
Reuters in September that MS&AD Insurance was in talks to buy into several life
insurers in Asia as it aims to tap the region's growing economies.
A unit of Tokio Marine halted talks with Malaysia's PacificMas to
buy medical insurance provider Pacific Insurance Bhd last July.
The market for Islamic insurance, or takaful, is expected to grow in tandem
with rising demand for ethical investments. Total takaful contributions could
reach $7.7 billion a year by 2012, Ernst & Young has forecast. But global
takaful contributions are less than 1 percent of the total insurance premium
spend annually, industry lawyers Clyde & Co have said.
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(Reporting by Taiga Uranaka; writing by Liau Y-Sing; editing by Lincoln Feast)