By Fathiyah Dahrul
Japan's fourth-largest private life insurer, Sumitomo Life Insurance Co, bought a 40 percent stake in the life insurance unit of PT Bank Negara Indonesia for 4.2 trillion rupiah ($351.10 million), the bank said on Monday.
The deal signals the rising appetite of Japanese companies for deals in the rapidly expanding economies of Southeast Asia.
Rising personal income in Southeast Asia is giving, for the first time in many cases, individuals and families the ability to afford insurance. That new demand has boosted stock prices and corporate valuations, culminating in a spate of M&A transactions.
"Together, BNI and Sumitomo Life will further grow BNI Life to capture greater market share...in an attractive market that presents tremendous upside with its low insurance penetration," said BNI's president director, Gatot Mudiantoro Suwondo.
Japan's top life insurers have relatively sound capital bases and stable premium incomes. Yet, they are under growing pressure to seek opportunities overseas as they face weak growth prospects at home. Japan's ageing population means fewer numbers of households will be needing expensive death benefit coverage for breadwinners.
Dai-ichi Life Insurance Co, the only listed among Japan's top four life insurers, in October completed the acquisition of a 40 percent stake in Indonesia's Panin Life for $337 million while in July Meiji Yasuda Life Insurance Co agreed to pay $700 million to buy a 15 percent stake Thai Life Insurance Co.
Sumitomo Life itself agreed to acquire an 18 percent stake in Vietnam's Bao Viet Holdings for about 7.1 trillion dong ($336.4 million) late last year.
Even Japanese banks have turned into aggressive buyers of Southeast Asian financial services companies, highlighted by two big transactions this year. Japan's biggest lender, Mitsubishi UFJ Financial Group (MUFG) agreed to pay $5.6 billion for a controlling stake in Thailand's Bank of Ayudhya and Sumitomo Mitsui Financial Group paid $1.5 billion for a stake in Indonesia's BTPN.
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