Tokio Marine boss to use Berkshire deal for global growth drive

{"text":[[{"start":7.6,"text":"The chief executive of Tokio Marine is leading a charge to turn the Japanese group into one of the world’s top five insurers within the next decade, fuelled by its newly minted partnership with Berkshire Hathaway."}],[{"start":21.6,"text":"Masahiro Koike, who took over at Japan’s largest insurer by value last year, said Tokio Marine was embarking on the latest phase of its long-term strategy to diversify the group."}],[{"start":32.8,"text":"The deal it announced this year with Warren Buffett’s conglomerate to buy a 2.5 per cent stake in Tokio Marine is essential to that effort, with Koike planning acquisitions to expand internationally and build up his newly established non-insurance business."}],[{"start":49.4,"text":"The non-insurance solutions business — a loosely defined term that covers a wide range of risk management activities and services — was kicked off last year with the purchase of ID&E, an engineering group that undertakes natural disaster mitigation and prevention."}],[{"start":65.55,"text":"Doing insurance M&A with Berkshire outside Japan will allow Tokio Marine to preserve firepower for the solutions business and permit Koike to go further, faster."}],[{"start":77.6,"text":"“The significance of the Berkshire deal is because if we are able to team up on the insurance M&A side, that would allow us to save some money to invest on the solutions side,” he told the FT in an interview."}],[{"start":90.25,"text":"The deal “opens up other options that we would not be able to do on our own”, Koike added."}],[{"start":96.65,"text":"He is targeting an increase in the solutions business from ¥10bn to ¥100bn ($625mn) by 2035, while group adjusted net income is to roughly double from ¥881bn to ¥1.7tn."}],[{"start":112.30000000000001,"text":"Tokio Marine shares are up by close to a fifth this year, leaving it worth ¥13.5tn."}],[{"start":null,"text":"

"}],[{"start":118.60000000000001,"text":"Founded in 1879 as Japan’s first insurance company, the group dominated the domestic market before expanding globally in the past few decades."}],[{"start":128.9,"text":"Its rivals in Japan include Sompo and MS&AD Insurance. The three groups were formed by a series of mergers in the 1990s and 2000s that consolidated the Japanese non-life insurance market."}],[{"start":141.65,"text":"Koike, who was born in France and has studied and worked in the US, is younger and more international than many other executives running top Japanese companies."}],[{"start":150.9,"text":"Tokio Marine’s international business now contributes almost two-thirds of its profits. The Berkshire deal could help reduce its concentration on North America, Koike said."}],[{"start":160.25,"text":"“Of that 65 per cent, about 90 per cent comes from the United States. So it is highly concentrated in the US. And based on where the geopolitical situation is, that definitely heightened our sense of urgency to regionally diversify further,” he said."}],[{"start":176.3,"text":"Tokio Marine’s plan is to create value by making sizeable acquisitions that combine Berkshire’s healthy balance sheet with the Japanese company’s operational expertise to take its “domestic and international operations to the next level”, Koike added."}],[{"start":189.95000000000002,"text":"The 10-year deal — which is to be exclusive for the first five years and capped at a potential 10 per cent stake — also involves Berkshire reinsuring an undisclosed portion of Tokio Marine’s total risk."}],[{"start":203.4,"text":"That balance sheet support will allow Tokio Marine to absorb “volatility” and expand faster into riskier business lines, Koike said, giving the examples of natural catastrophe on property and cyber insurance."}],[{"start":217.1,"text":"Meanwhile, Tokio Marine is still dealing with the fallout from Greensill Capital. The Japanese group was the main insurer to the collapsed supply chain finance provider and recently provisioned an estimated after-tax ¥50bn that included the impact of litigation in Australia."}],[{"start":240.4,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1780801018_8967.mp3"}