Nippon Life Insurance Co, the largest Japanese life insurer by revenue, announced that it has agreed to acquire a 35-per cent stake in Myanmar’s Grand Guardian Life Insurance Company (GGLI) for about ¥23 billion ($21 million).
The acquisition, which is subject to the relevant regulatory approval, is expected to be completed by October this year, with Grand Guardian to be renamed as Grand Guardian Nippon Life Insurance under the terms of the deal.
Nippon Life acquired the 35 per cent stake from Grand Guardian Insurance Holding Public Co (GGIH), which will hold the remaining 65 per cent share.
The deal comes nearly six years after Myanmar opened the insurance sector by granting licenses to local private insurers. Foreign life insurers entered the market by forming joint ventures with local partners.
Aside from Nippon Life’s partnership with Grand Guardian, three other foreign life insurance companies formed joint ventures with local partners, namely, Citizen Business Insurance, Capital Life Insurance, and First National Insurance.
“While the life insurance market in Myanmar is still in a nearly stage of development with private insurers granted licenses in 2013, with attractive demographics and solid economic development, high growth rate of the life insurance market can be expected over the long term,” Nippon Life said in a statement.
In April, Myanmar allowed five foreign companies to operate life insurance business in the frontier country.
The Ministry of Planning and Finance (MoPF) of Myanmar has decided to award Preferred Applicants Foreign Life Insurance Licences to Japan’s Dai-ichi Life Insurance Company Limited, Manufacturers Life Insurance Company Canada, AIA Company Limited, Chubb Tempest Reinsurance Limited from Bermuda, and Prudential Hong Kong Limited, a member of the Prudential plc from the U.K.
The foreign insurers will be operating in Myanmar as 100 per cent wholly-owned subsidiaries of the parent companies once they are granted the licence. The companies will have to comply with pre-licensing conditions stipulated by MoPF before being granted the Preferred Applicants Foreign Life Insurance Licences.
The foreign companies will be competing with three local companies that focus on providing life insurance and nine local private insurers that are approved for composite insurance, both life and general.
Currently, there are about 21 foreign insurance companies that are allowed to operate in the country by opening up representative offices, out of which three companies from Japan are allowed to operate only in the Thilawa Special Economic Zone.