Tokio Marine Hunts for Deals Abroad, Sees Room for Growth in US | Company Business News

(Bloomberg) — Tokio Marine Holdings Inc. sees scope for further expansion in the US as Japan’s largest property-and-casualty insurer explores acquisition opportunities around the world, its new chief executive officer said.

“We want to expand in countries other than the US for geographic diversity, but the US non-life insurance market is far bigger than others,” Masahiro Koike said in an interview. “So we don’t have to worry too much about being overweight there.” 

Tokio Marine has made a string of big acquisitions in the US in recent years, including high-net-worth insurer PURE Group for $3.1 billion in 2020, to make up for limited growth prospects at home. The insurer and its rivals have the capacity for more deals overseas after generating record profits by selling shareholdings worth tens of billions of dollars. 

Koike, who became CEO on Monday, didn’t single out specific markets for acquisitions, saying his company is seeking potential deals in the 44 countries and regions where it operates. 

“If there are good opportunities, we want to grab them,” he said. “Deal prices remain very expensive, but we might miss the chance if we sit on our hands.”

Typically though, the company spends years examining its long list of targets to determine their strategic and cultural fit. In the case of PURE, Tokio Marine had the company on its radar for more than a decade. 

Tokio Marine has spent at least $24 billion on acquisitions abroad in the past 20 years, according to data compiled by Bloomberg. As a result, its overseas businesses account for more than 70% of its profit.

Koike, 53, joined Tokio Marine in 1994 after graduating from university. His career includes a stint in New York, where he worked on the sale of the company’s reinsurance business to RenaissanceRe Holdings Ltd. in 2019.

With a market capitalization of more than ¥11 trillion, Tokio Marine is the biggest of Japan’s top three property-and-casualty insurers. The firms have pledged to eliminate so-called cross-shareholdings after they came to symbolize unhealthy relationships with corporate clients during a price-fixing scandal in 2023. 

Tokio Marine sold ¥922.2 billion of such holdings last fiscal year and plans to offload a further ¥600 billion in the year through March 2026. 

The insurer has said it plans share buybacks totaling ¥220 billion for the current fiscal year. Koike said the size of repurchases isn’t necessarily dictated by an imminent acquisition in the works. 

“We cannot know the timing of M&A, so it’s better not to read too much into the levels of buybacks we announce,” he said. 

Another challenge is how to reshape its securities portfolio after the company offloads its remaining cross-holdings, which generate hundreds of millions of dollars in dividends annually.

“Of course, shareholders are paying particular attention to how we’ll use the proceeds from selling strategic holdings,” Koike said, adding it is striking a balance between shareholder returns and growth investment. 

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