Japan's major insurer Tokio Marine is pursuing overseas mergers and acquisitions (M&A) worth several billion dollars targeting insurers in Australia and Canada. Attention is also on what role Berkshire Hathaway (hereafter Berkshire), which agreed to cooperate on large overseas M&A when it acquired 2.5% equity in Tokio Marine in Mar., will take in this transaction.
On the 25th (local time), the Financial Times (FT) reported, citing people familiar with the matter, that Tokio Marine has been conducting due diligence for months on insurers in Australia and Canada. The push for a large overseas acquisition is part of CEO Koike Masahiro's strategy to diversify the business of Tokio Marine, one of Japan's largest financial services corporations. If the transaction is completed, it is expected to be the largest acquisition in Tokio Marine's history.
The M&A cooperation between Berkshire and Tokio Marine is also drawing attention. Berkshire, led until recently by Warren Buffett, agreed in Mar. to cooperate on large overseas M&A when it acquired 2.5% equity in Tokio Marine. The idea is to combine Berkshire's financial capacity with Tokio Marine's insurer operating capabilities and experience in sourcing acquisition targets to jointly pursue large-scale acquisitions. However, regarding Berkshire's role in this transaction, FT said it is not yet clear.
Acquisition candidates reviewed by Tokio Marine included Australia's major non-life insurers Suncorp and Insurance Australia Group (IAG), and Canada's Intact Financial Corporation. Suncorp's market capitalization is about $14 billion (about 19 trillion won). IAG's market capitalization is about $13 billion (about 17 trillion won), and Intact Financial is about $34 billion (about 47 trillion won).
According to FT, two people familiar with the matter said Suncorp is the most likely among the three acquisition candidates. Intact is said to have been judged too large to acquire. However, as discussions are ongoing, the sources added it is not certain whether it will lead to an actual transaction.
Tokio Marine has actively acquired overseas insurers over the years. Since 2008, it has invested about $19 billion (about 2.631 trillion won) in five large M&A deals in the overseas non-life insurance sector. The largest transaction to date is the acquisition of U.S. insurer HCC for $7.5 billion (about 1.038 trillion won).
Suncorp, cited as a strong candidate, is a major insurer headquartered in Brisbane, Australia. It operates brands including AAMI and GIO. After selling its banking division to Australia's ANZ in 2024, it has been mentioned as a potential acquisition target in the insurance industry.
Australia is considered one of the main overseas investment destinations for Japanese corporations. According to a report by law firm Herbert Smith Freehills Cramer and the Australian National University, Japan's direct investment in Australia last year reached $113 billion (about 156.49 trillion won), a record high. The number of transactions totaled 77. The report analyzed that, backed by population growth and strong consumer purchasing power, Australia's life insurance and financial services sectors are being evaluated as attractive markets for Japanese investors. If Tokio Marine succeeds in acquiring Suncorp, Japan's financial corporations are expected to accelerate their push into the Australian market.