Japan’s contracting life insurance
market has brought about merger discussions between Japan-based
insurers Sompo Japan Himawari Life Insurance (Sompo Life) and
Nipponkoa Life Insurance to enter into merger discussions. The
development follows shareholder approval received in December 2009
for Sompo and Nipponkoa to merge their general insurance
operations, a move creating Japan’s third-largest general
insurer.
The life insurers’ proposed merger is subject
to negotiations anticipated to take up to two years to complete.
Sompo Life appears likely to be the dominant participant.
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Specifically, Sompo Life is the largest in
terms of net assets – which it reports as ¥53.2 billion ($573
million), double Nipponkoa Life’s ¥23.2 billion.
In profit terms Sompo Life is also the
largest, having reported a net profit of ¥5.87 billion in its
financial year to March 2009 compared with a net loss of ¥619
million reported by Nipponkoa Life.
In terms of premium income Sompo Life reported
¥124 billion in 2008-09, almost double the ¥63.6 billion Nipponkoa
Life reported for the same period.
Highlighting tough conditions in Japan’s life
market, Sompo Life’s premium income in 2008-09 fell 26.1 percent
compared with 2007-08, a year in which a 13 percent decline was
recorded.
Continuing this trend, Sompo Life reported
premium income of ¥67.9 billion in the first half of its 2009-10
financial year, 10.4 percent down compared with the first half of
2008-09.
