Aioi Acquires Short-Term Household Insurer in Japan
Aioi Insurance Co. Ltd. [85028] has acquired a 35% stake in Zenkankyo, a mini-insurer specializing in short-term household insurance, in a bid to enhance business development for products and services in Japan.
Aioi and Zenkankyo will operate mutually as two entities with the promotion of their insurance business in the house rental sector, according to the insurers’ joint statement.
With capital of ¥1 billion (US$11 million), Zenkankyo reported net income of ¥181 million and premium income of ¥6.4 billion for the fiscal year ended March 31, 2009. The insurer is 65% owned by Zenkoku Chintai Kanri Business Kyokai, a house rental business association with 2 million houses in management across Japan.
In the first six months of the current year ended Sept. 30, Aioi posted net income of ¥17.2 billion, up from previous year’s ¥5.8 billion.
Japan’s business environment remains stagnant despite recent recovery indications such as improvements in excess inventory levels and large-scale stimulus measures. The company “has continued to develop our business aiming at being an insurance group” for steady growth, said Aioi in its interim financial report.
—Iris Lai


Mitsui Sumitomo to Invest
In China Pacific’s IPO
Mitsui Sumitomo Insurance Co. Ltd. [90542] said it plans to invest in China Pacific Insurance (Group) Co. Ltd. [90598] through a capital contribution for the Chinese insurer’s planned initial price offering on Hong Kong’s stock exchange this month.
The capital contribution will be about US$65 million, said a Mitsui Sumitomo spokesperson.
Mitsui Sumitomo set up a subsidiary, Mitsui Sumitomo Insurance (China) Co., in Shanghai in July 2007. Last May, it established a Beijing branch. The Japanese insurer has a presence in China’s three major geographic centers in the northern, eastern and southern regions.
Mitsui Sumitomo China reported premium income of 294 million yuan (US$43 million) for 2008, making it third-largest foreign nonlife insurer in China, according to the China Insurance Regulatory Commission.
The tie-up with China Pacific, China’s second-largest nonlife insurer with premium income of 27.8 billion yuan in 2008, will strengthen the Japanese insurance group’s business development in China, the insurer said.
Mitsui Sumitomo is aggressive in expanding its overseas operations, especially in the Asian market, according to BestLink.
—Iris Lai


US, Japan Groups Raise Concerns as Japan Post’s Privatization Is Halted
The American Council of Life Insurers has urged Japan to “honor its commitments” to a level playing field as the government freezes the privatization plan for Japan Post Holdings and its insurance and banking subsidiaries.
Japan’s Diet enacted legislation to freeze the sale of shares in state-owned Japan Post Holdings, Japan Post Insurance [90527] and Japan Post Bank on Dec. 4, as part of the new government’s effort to review post services and reform.
“It is vital that Japan gets this right,” said Frank Keating, president and chief executive officer of ACLI, in a statement. The enormous international presence and investment in Japan’s financial services sector is certain to be affected by the direction government takes, he added.
“Japan has a duty to provide national treatment to foreign participants in its market now and in the future,” said Keating. In reviewing Japan Post’s position, the government has to consider “the need for equivalent conditions of competition, real transparency and cooperative involvement among all stakeholders,” he noted.
Japan’s local private life insurers echoed the similar concerns. “A free and fair competition” market environment for private insurers should be taken into consideration, said Yoshio Sato, chairman of the Life Insurance Association of Japan, in a statement.
While the new government’s review is to secure postal services to local communities and social life of people, the development must take account of healthy economic prospects for the benefit of people in Japan. Fair competition should be considered, such as compliance before Japan Post Insurance expands its insurance business, according to Sato.
Japan’s previous Liberal Democratic Party-led government rolled out a 10-year privatization plan for Japan Post in 2007, breaking the group into four subsidiaries of insurance, delivery, post networks and banking.
The new government, elected in August and led by the Democratic Party of Japan, has place greater importance on the postal operations’ social role in providing services of a public nature.
The privatization setback is “bad news” for private insurers, said Neil Katkov, senior vice president and head of Asia research at Celent, an international management and consultancy firm. The new government set for itself the task of building market share for Japan Post Insurance by putting in place a more aggressive management team and plan. As for private insurers, they would face a competition challenge similar to when Japan opened the insurance sector to foreign players about a decade ago, Katkov said.
— Iris Lai