* MS&AD is 4th Japanese insurer to enter Indian market
* MS&AD unit to get two board seats in India JV
* Concerns raised that Japan insurers are overpaying for
* Indian life insurers see declining premium
By Taiga Uranaka and Devidutta Tripathy
TOKYO/NEW DELHI, April 12 Japan's MS&AD
is buying New York Life's 26 percent stake in a joint
venture with Max India for about $530 million, the
latest in a spate of outbound deals from Japan and the second in
about a year with an Indian insurer.
MS&AD Insurance Group, Japan's largest property-casualty
insurer by revenue, is among the industry's most aggressive in
expanding in Asia through acquisitions, buying both life and
non-life assets to secure growth beyond its weak home market.
A year ago, it bought a 50 percent stake in Indonesia's PT
Asuransi Jiwa Sinarmas for about 67 billion yen ($827.21
million). It was already in a general insurance joint venture in
Now, one of its core units, Mitsui Sumitomo Insurance, has
struck a deal for the stake in Max New York Life, India's
sixth-largest life insurer based on premium income, for 27.3
billion rupees ($530.72 million).
The 26 percent stake is the maximum allowed for foreign
ownership in Indian life insurers, although a possible change to
lift the limit to 49 percent has long been pending.
Max India Chairman Analjit Singh told reporters at a press
conference in New Delhi that Mitsui Sumitomo made an unsolicited
offer to New York Life eight or nine months ago.
New York Life recently sold businesses in China, Thailand,
South Korea and Hong Kong.
"We are focused on, concentrating on, our leading market
positions that we have in the United States and Mexico and that
is the driver of our repositioning from our international
businesses," Michael Sproule, chief financial officer for New
York Life, told reporters in the Indian capital.
The joint venture had gross insurance premiums of 58.1
billion rupees and pretax shareholder income of 1.94 billion
rupees for the year ended in March last year, Mitsui Sumitomo
Under the deal, Mitsui Sumitomo will get two seats on the
board of the joint venture, which will be renamed Max Life
Insurance, the Japanese company said.
Despite the large size of the Japanese economy there is
little growth in its domestic market. That, combined with low
interest rates and a strong yen, has pushed Japanese companies
to aggressively buy up overseas assets.
Last year, Japan's Nippon Life Insurance Co bought 26
percent of Reliance Life Insurance, a unit of Indian billionaire
Anil Ambani's Reliance Capital, for $680 million.
India's $41 billion life insurance industry is dominated by
state-owned Life Insurance Corp of India with a 70 percent
PAYING TOO MUCH?
Japan's insurers have been particularly aggressive in
overseas acquisitions. Thursday's deal marks the fourth entry of
a Japanese player into a life insurance market which holds
plenty of potential given low penetration and rapid economic
growth, but is fiercely competitive, with 24 players.
Premium income at Indian private sector insurers fell 18
percent to 252 billion rupees in the year through February after
a regulatory clampdown on the sale of equity-linked products
Several of the foreign joint venture partners in smaller
Indian insurers have also been looking to exit as they face
pressure in their home markets and struggle with a challenging
Tokio Marine, taking advantage of its financial
firepower, has been bagging bigger and more expensive deals in
Europe and the United States, including a $2.7 billion
acquisition of U.S. insurer Delphi Financial Group.
And Meiji Yasuda Life Insurance Co, Japan's No. 2
life insurer, said in January it wanted to do deals, and was
planning to acquire one or two overseas companies in emerging
economies this year.
For a Factbox on recent overseas deals by Japanese life
Some industry executives say many prospective deals are
unattractive and too expensive. Cheap borrowing and a strong
currency make it easier for Japanese buyers to pay higher prices
but there is some concern about paying too much.
MS&AD was criticized for overpaying for Sinarmas and that
has put pressure on the amount that Japanese insurers are
willing to spend, M&A bankers have said.
There are also concerns that huge losses from Thailand's
flood damage coverage could have sapped Japanese insurers' M&A
war chests. In February, MS&AD said it expects a net loss of 145
billion yen for the year ended in March, hurt by more than 200
billion yen payment for Thai flood losses.
Citigroup Inc advised MS&AD on the deal while Goldman
Sachs advised Max India, Singh said.
MS&AD shares ended down 1 percent in Tokyo on Thursday,
underperforming a 0.7 percent gain in the benchmark Nikkei
average. Max India shares finished up 8.4 percent in