MS&AD sets its sights on M&A in Europe as it looks to grow

 

Published in 'Insurance Day' 23rd July 2010

 

Japanese Insurance giant MS&AD Insurance Group Holdings is eyeing up potential M&A opportunities in Europe, according to its chief executive, Toshiaki Egashira.

 

Unveiling the new company’s three-year business plan to Insurance Day in London, Egashira said that MS&AD - the amalgamation of Mitsui Sumitomo, Aioi Insurance and Nissay Dowa – had set itself a target of reaching a group core profit of Yen150bn ($1.73bn) for the 2013 fiscal year with 20% of this being generated from business outside of Japan, compared to 15% today.

 

Although Egashira said increasing the group’s presence across the Asia region remained its number one priority he said that expansion in Europe “definitely comes next” on the insurer’s immediate agenda.

 

“Across Europe we are already doing some Japanese corporation-related business and also some Lloyd’s business [via Syndicate 3210, the first Japanese syndicate to be established in Lloyd’s in 2000],” he said.

 

“We would like to grow in these businesses but at the same time we would also like to grow or improve our businesses on the continent, especially in Germany and France. This includes ‘local’ business, not just Japanese-related business.”

 

“At the same time, we are seeking opportunities to expand the operations in Europe through M&A,” Egashira continued.

 

After its own mega-merger, MS&AD Group, which was incorporated on April 1, is now the world’s seventh largest non-life insurer by premium income (Yen2.52trn) and the number one carrier in Japan However, Egashira said the group had work to do on improving its profitability [its RoE target for 2013 is 7%] and that it was keen to “realise synergies” within the three companies MS&AD comprises.

 

“We are trying to establish a ‘share service company’ within the group so that the three companies that have integrated can share all the services of the company,” he said. The aim is for this to be in place by 2013. Egashira also said that MS&AD could save approximately Yen50bn a year from 2015 by integrating its IT systems.

 

“We are also trying to integrate and consolidate our offices and bases and make efficient use of our personnel as well,” he said although he said redundancies would not be necessary in order to achieve the latter.