TOKYO May 2 Japan's largest property and casualty insurer, MS&AD , said on Monday it has agreed to buy a 50 pct stake in the life insurance unit of Indonesian conglomerate Sinar Mas for about 67 billion yen ($825 million).
Japanese insurers have been stepping up their overseas expansion and focusing on emerging economies in Asia as they expect growth at home to remain weak given the country's ageing population.
Pending approval from local regulators, core MS&AD unit Mitsui Sumitomo Insurance will acquire the 50 pct stake in PT Asuransi Jiwa Sinarmas via a private placement of shares, the Japanese company said. The other half will be owned by the conglomerate's financial holding firm PT Sinar Mas Multiartha .
In a statement, Mitsui Sumitomo said that with Indonesia's stable economic growth the country's insurance market is likely to expand rapidly as more middle-class households start buying insurance.
The company said Indonesia is also seen as a promising market for takaful, or Islamic insurance.
MS&AD was created in April last year through the merger of three insurance companies, becoming Japan's top property-casualty firm in terms of net premiums written.
The company has been most aggressive in expanding in Asia. It bought Aviva's property-casualty insurance operations in Asia for 65 billion yen in 2004, propelling it into the league of major non-local players in many of the region's markets.
Last year it acquired a 30 percent stake in the life insurance business of Malaysia's Hong Leong Financial Group for 940 million ringgit ($304 million) and merged their non-life operations in the country.
Separately, MS&AD said it has cut its profit estimate for the year ended in March due to insurance payouts for damage in Japan's devastating March 11 earthquake and tsunami.
The company said it now expects to book a net profit of 5 billion yen for the year just ended, down from its previous estimate of 40 billion yen and sharply below analysts' average forecast of 30.3 billion yen according to Thomson Reuters Starmine SmartEstimate.
The firm said it estimates its insurance payouts related to the disaster to come to about 65 billion yen after subtracting the amount covered by reinsurance. It said the payout estimate does not include that for household earthquake insurance. ($1 = 81.230 Japanese Yen) (Reporting by Taiga Uranaka; Editing by Hugh Lawson)