Nippon Life Insurance Co, Japan's largest life insurance company, is in advanced talks with Reliance Life Insurance Company Ltd to acquire a 26 per cent stake in the Indian insurer for about 60 billion yen ($724 million).
The move by Nippon Life Insurance (also known as Nissay) to acquire the maximum stake allowed by the Indian government in a domestic insurance company is the latest by a Japanese insurer to expand overseas.
Anil Ambani-controlled Reliance Capital, which runs the life insurance business, has been looking for a strategic partner to expand its insurance business. Post stake sale, Reliance Life is expected to come out with an initial public offer, Japanese newspaper reports said.
With a comparatively low insurance penetration level, India is still a luring market for insurance companies across the world. Compared with life insurance penetration level of 13.5 per cent of gross domestic product in Britain, life insurance penetration in India is only about 4 per cent, and a still lower 2.4 per cent in China.
With expected average economic growth rate of over 9 per cent, India is seen by insurance firms the world over as the most potential market other than China.
With domestic market narrowing and with slugglish economic growth and dwindling population, insurance companies in Japan have increasingly been looking overseas for growth - both organic and inorganic.
Nippon Life Insurance, which has some 12 million policyholders in Japan, uses a door-to-door sales corps to peddle its traditional insurance products, including individual and group life and annuity policies. Nippon Life also sells through agencies and partnerships with financial institutions such as banks.
Nippon Life Insurance Company, together with its subsidiaries, provides various life and non life insurance products and services
In addition, Nippon Life Insurance Company acts as a proxy for other insurance companies and financial institutions; and credit guarantee, as well as involves in the sale of investment trust beneficiary securities. The company operates in North America, Europe, Oceania, Asia, Central and South America, and the Middle East.