MS&AD reportedly plans $5bn investment to boost North American growth
MS&AD Insurance Group Holdings plans to invest up to Y700bn to grow its North American operations, aiming to double operating profits in the region, Bloomberg News reported, citing the company's CEO.
The Tokyo-based insurer, which leads in market share among global companies in Asia, is the third-ranked Japanese insurer in North America.
'So the challenge is how to become the top player there,' CEO Shinichiro Funabiki told Bloomberg in an interview.
'We need to strengthen our organisation so that we can double our profits in the near future,' said Funabiki, noting that specific business areas and investment targets will be decided later.
Funabiki said the company intends to maintain its current investment approach.
MS&AD projects net profits from its North American operations, encompassing Canada and Mexico, to hit Y166bn in the fiscal year ending March 2025, a 3.5-fold rise from the prior year.
Amid a declining domestic market due to Japan's shrinking population, Japanese insurers are pursuing overseas growth through acquisitions.
In March, MS&AD's subsidiary, Mitsui Sumitomo Insurance Co., revealed plans to purchase a 15% stake in US-based W.R. Berkley Corp.
Funabiki affirmed the company's commitment to a bold investment approach. After factoring in the W.R. Berkley deal, MS&AD estimates Y600bn–Y700bn remains for investments, partly funded by proceeds from divesting cross-held shares in companies with prior business connections.
Additionally, MS&AD is looking to merge its non-life insurance units, Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance, with April 2027 the target date for completion.
Funabiki declined to discuss potential cost savings from the merger but suggested it could strengthen group governance.
Japan's Financial Services Agency issued business improvement orders in March to four non-life insurers, including Mitsui Sumitomo Insurance, for mishandling customer data, and in December 2023 for colluding on pricing in corporate contracts.
'The most lacking aspect was the ability to anticipate risks,' Funabiki said, noting that 'having two insurance companies of the same size with a dispersed organisational structure is not an optimal state'.
The merged entity may adopt a merit-based personnel system, moving away from seniority, a change Mitsui Sumitomo Insurance initiated this fiscal year.
"MS&AD reportedly plans $5bn investment to boost North American growth " was originally created and published by Life Insurance International, a GlobalData owned brand.
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