Life insurers to settle merger this month


Tokio Marine will have the largest insurance sales network in Japan after its April merger with Nichido Fire

TOKYO, Japan -- Japan's largest nonlife insurer, Tokio Marine & Fire Insurance Co., plans to wrap tieup talks with Asahi Mutual Life Insurance Co. by the end of January.

Executives from both companies gathered Monday to discuss their link. The companies said they will complete their negotiations this month.

Tokio Marine has agreed to buy Asahi Mutual's sales network, with a report suggesting it will pay more than 100 billion yen ($755 million).

But the companies are stuck on price, with Asahi demanding double that amount, according to the Yomiuri Shimbun.

Asahi Mutual plans to transfer its sales network to Tokio Marine Life Insurance Co. in March, leading to a combination of the operations in March 2003.

Asahi Mutual's 20,000 sales staff and its sales outlets would then become part of Tokio Marine. Asahi Mutual would then focus only on existing policies after the sale.

Discussing a full merger

But the two companies are also discussing whether to integrate their operations completely.

They are already partners in the Millea Insurance Group, a consortium they formed in late 2000 and which includes Nichido Fire & Marine.

Tokio Marine is set to merge with Nichido in April, which will leave it with the largest sales network in Japan.

Asahi Mutual is also seeking a full merger. But Tokio Marine shareholders are resisting the move.

One report suggests Tokio Marine may put off a merger until 2004. Asahi Mutual would likely then seek to bolster its operations independently, in talks with its main bank, Dai-Ichi Kangyo Bank.

The companies now agree to settle the terms of their link by the end of January. Asahi Mutual has asked Tokio Marine to define conditions that need to be met to complete a full merger.

Tokio Marine's stock was down 2.95 percent at 921 yen at the lunch break in Tokyo trade on Monday.

Auto insurance makes up more than half of Tokio Marine's business, but it has been expanding into life insurance after industry deregulation.