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Japan’s Mitsui Sumitomo plans 500 billion yen fund for foreign M&As, report says

Mitsui Sumitomo
By Hui Ching-hoo   
April 9, 2021

Japan’s Mitsui Sumitomo Insurance plans to set up a 500 billion yen (US$4.55 billion) fund for foreign mergers and acquisitions over the next three years, Shinichiro Funabiki, the company’s newly minted chief executive, says in an interview with The Nikkei newspaper.

The insurer “hopes to diversify its portfolio as it faces a difficult earnings environment in Japan”, Funabiki says in the interview published on April 7.

“Now that we have made it into the global top ten by revenue, we need to reach the top level in terms of profits. We will create a 500 billion yen fund for overseas M&A,” he says.

The company will use its surplus cash as capital for the fund, which will allocate around 60% to North America.

Funabiki succeeded Noriyuki Hara as president and chief executive on April 1. Hara is now chairman of the board and representative director.

Spokespersons for Mitsui Sumitomo did not immediately respond to questions from Asia Asset Management (AAM).

Japanese insurers are actively seeking mergers and acquisitions opportunities globally because the local market has matured and the country’s population is shrinking, according to Teruki Morinaga, director for insurance at Fitch Ratings Japan.

“Among three Japanese mega non-life groups, Tokio Marine Group has been doing best in international operation in that it earns roughly half of [its] non-life profits from [the] US market. Sompo Group has also been expanding its US operation. Therefore, it is natural for Mitsui Sumitomo to follow the steps,” Morinaga tells AAM.

Mitsui Sumitomo had around 6.69 trillion yen of total assets as of March 2020.