Nippon Life to acquire MassMutual banca unit

Nippon Life Insurance Co [NPNLI.UL], is in talks to buy a majority stake in the domestic unit of US-based MassMutual Financial Group in an attempt to boost its bancassurance sales, according to sources.

The Nikkei business daily, which first reported the talks, said Nippon Life was likely to pay JPY100 billion to JPY200 billion (USD887 million to USD1.77 billion) for the stake in MassMutual Life Insurance Co.

Nippon Life and MassMutual Life Insurance Co declined to comment. MassMutual’s Japan unit has about USD25 billion in assets and had premium revenue of USD2.86 billion for the year ended in March. The mid-sized insurer is known for its foreign currency-denominated products sold at bank branches.

Japanese insurers are already taking steps to embrace bancassurance. For instance, Nippon Life completed a USD2.5 billion acquisition of Mitsui Life Insurance Co last year to partly bolster sales through bank branch networks.

Dai-ichi Life Holdings Inc has been building distribution channels in addition to traditional door-to-door sales, setting up new insurance companies focused on selling products at bank branches and third-party insurance brokers.

Japanese insurers have been hit by diminishing returns from investments in Japanese government bonds and other securities amid the Bank of Japan’s massive stimulus measures, prompting them to seek riskier but higher-yield assets.