8 September 2015 Insurance

Mitsui Sumitomo-Amlin tie could suit both parties

Mitsui Sumitomo Insurance Company’s ¥634.7 billion (£3.4 billion) deal to acquire Amlin Insurance is a deal driven by both economic conditions in Japan and pressures on the global re/insurance market and could work for both parties.

With growth prospects limited in the Japanese domestic market, Mitsui Sumitomo is just the latest of a number of Japanese insurers that have made important acquisitions in recent years in an attempt to diversify into new markets.

The London market and Lloyd’s have been the main focus. Tokio Marine acquired Kiln based on this logic and Sompo Japan Nipponkoa Holdings acquired Canopius Group.

Other deals have taken place outside the London market. Sompo Japan Nipponkoa took a stake in Scor in March and Tokio Marine has agreed to buy US insurer HCC Insurance earlier this year.

Amlin’s growing international presence will have been of interest to its suitor. It has a global footprint with underwriting operations in Europe and Bermuda as well as at Lloyd’s. It opened an office in Miami last year and this year revealed plans to begin operating in Dubai while reinforcing its position in Asia by participating in the Lloyd’s platform in Shanghai.

Yasuyoshi Karasawa, president and chief executive of MSI, said he expected the deal to accelerate MSI's strategy of growing its international business, and drive a number of benefits across Amlin's business as a result of it being part of a substantially larger group.

From Amlin’s perspective, it is operating in a global re/insurance market that is increasingly competitive and in which size and global reach are ever-more important. This dynamic has driven a raft of consolidation in the sector recently with PartnerRe, Catlin and

Charles Philipps, chief executive of Amlin, clearly stated that have Mitsui Sumitomo as a parent would help in this competitive landscape. He said it would offer Amlin increased the scale and financial muscle required for long term success in the industry.

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