Nippon Life’s US$12 billion acquisition spree is just beginning

NIPPON Life Insurance has done more than US$12 billion of deals this month alone. Japan’s biggest insurer is not finished yet.

Having committed to pouring billions into a pair of global insurers, the Osaka-based company is now turning to asset managers, as it seeks to diversify business at home and abroad. One of those is TCW Group.

Nippon Life is seeking to obtain a majority stake in the Los Angeles-based firm as the foundation of its global asset management expansion, president Hiroshi Shimizu said. It already has about a 27 per cent stake in TCW, which is also 34.2 per cent owned by private equity powerhouse Carlyle Group and the rest by management and employees.

“We are talking with Carlyle and TCW, with us having a majority as an option,” Shimizu said. In addition to TCW, he said his company is also looking for “various opportunities” in its asset management buildup.

Nippon Life and other Japanese financial firms such as Mitsubishi UFJ Financial Group are ramping up overseas as the country’s shrinking and ageing population poses challenges to their growth trajectory. With the recent string of deals, Nippon Life has already spent two trillion yen (S$17.3 billion) earmarked for acquisitions to 2026, and the company has said it envisions an additional two trillion yen for growth outlays to 2035.

Shimizu said TCW needs to improve its value by boosting its performance before the Japanese insurer can buy the stake from Carlyle. “I don’t think Carlyle can sell its stake unless it can realise returns that are satisfactory to its investors,” he said.

TCW, which manages about US$200 billion of client assets and has a long track record of overseeing bond funds, is expanding into the private credit market as part of its growth strategy.

Earlier this month, Nippon Life said it committed up to US$3.3 billion to TCW’s private credit strategies. The insurer also said it will invest an additional US$550 million in the asset manager.

“By contributing the money from Nippon Life, we want to accelerate its growth in private credit,” Shimizu said.

Shimizu, 63, who been president since 2018, will step down to become chairman on Apr 1. Executive vice-president Satoshi Asahi, 61, will take his role.

Shimizu has spent all of his professional career at Nippon Life. As a certified actuary, he rose through the ranks in the finance, product development and strategic planning sections. He led the talks when the company agreed on its initial investment in TCW in 2017.

Nippon Life has been on a spending spree this year.

Earlier this month, it agreed to buy Bermuda-based Resolution Life Group Holdings for about US$8.2 billion in the biggest takeover by a Japanese insurer. It also completed the acquisition of a 21.6 per cent stake in Houston-based Corebridge Financial for US$3.8 billion from American International Group.

At home, it bought nursing and childcare provider Nichii Holdings for 210 billion yen this year. The company is looking for further acquisition opportunities in non-insurance businesses in Japan as part of its diversification strategy, Shimizu said.

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Nippon Life is Japan’s largest life insurer, with more than US$600 billion in assets. The unlisted firm is owned by its insurance policyholders. Meiji Yasuda Life Insurance and Sumitomo Life Insurance are also mutual companies.

Among Japan’s top life insurers, Dai-ichi Life Holdings is listed with a market value of about four trillion yen.

Shimizu said Nippon Life has no intention to become a publicly traded stock company, pointing out that it does not need to raise equity financing.  

“My impression is activist shareholders’ demands are further leaning on short-term results nowadays,” he said. “As a mutual company, we can run the business with a long-term view.”

With that perspective in mind, Shimizu said the yen’s depreciation will not dampen the company’s acquisition drive.

“We are not buying and selling businesses in a short period of time,” he said. “We intend to have them for 20 or 30 years.” BLOOMBERG