Billionaire Richard Li’s insurance company FWD has agreed to buy Fuji Life Insurance from AIG following a multi-year search for the right asset in the world’s second largest insurance market.
FWD, the insurance arm of Li’s Pacific Century Group, is building an insurance platform across Asia Pacific and Japan has long been a big piece of the puzzle.
“This acquisition creates a much more balanced presence in Asia,” FWD's CEO Huynh Thanh Phong told FinanceAsia.
Huynh has been forging a pan-Asian insurer out of new ventures across Southeast Asia and a multi-billion-dollar business bought from Dutch bank ING back in 2012. Earlier this year it bought insurance businesses in Vietnam and Singapore.
Cracking the Japanese market will allow FWD to finance further growth and innovation across emerging markets where insurance is underused.
Fuji Life Insurance recorded annualised new premiums of $124 million in 2015 up from $83 million in 2012. The firm has assets under management of $3.79 billion as of end 2014.
FWD has been scouting for deals in the market since its establishment. “This is a market that is very hard to ignore, so we’ve been looking to enter for a while,” Huynh said in a telephone interview.
FWD already has a team both at group level and in Japan ready to smooth the transition from AIG ownership to FWD’s.
Richard Li, the younger son of one of Asia’s richest men Li Ka-Shing, was also in advanced talks to buy ING’s business in Japan back in 2012, but the deal eventually fell through.
ING had guaranteed payouts to variable annuity holders which made the business more risky for the entrepreneur.
ING stopped selling variable annuities in Japan in 2009 but was still obligated to service existing accounts. As of June 30, the variable annuity portfolio consisted of 384,000 policies with a total account value of about €17.9 billion.
Following completion of the deal, FWD will maintain Fuji Life Insurance’s existing life insurance distribution agreements with AIG Japan. In-force policies will not be affected by the expected transfer of ownership.
“Fuji is smaller in the Japan context, and is a newer company so it does not come with a large legacy book,” said Huynh, who was born in Vietnam but grew up in Canada. “We’re focused on selling insurance protection versus savings products with a guarantee.”
Fuji Life Insurance was founded in 1996 as a subsidiary of The Fuji Fire and Marine Insurance Company.
FWD did not use external financial advisers on the transaction. Debevoise & Plimpton advised AIG on the sale.