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Japanese insurers expand in London; Aioi & Tokio Marine set up London operation

World’s largest insurer AIG has announced the acquisition of the insurance portfolio of the Royal & SunAlliance (R&SA) branch operations in Japan by its subsidiaries American Home Assurance Company and AIU Insurance Company.

The deal cost £92mn, the insurer said, with ongoing annual gross premiums expected to be in the region of approximately Y11bn. The business will be administered through AIU and American Home’s existing infrastructure in Japan.

Robert Clyde, president of AIG Companies in Japan and Korea, commented: “The acquisition of this book of business is good for the R&SA policy holders and a good strategic fit for AIG. It will provide substantial opportunities to profitably expand AIG’s presence in Japan in several important markets, including personal accident, commercial property and marine insurance. The AIU and American Home units are respectively the leading foreign property-casualty insurance and direct marketing insurers in Japan, and AIG’s presence in Japan dates back 50 years. We have a long term commitment to Japan and a strong established infrastructure to provide these policyholders very responsive service and support.

Separately, Japanese insurer Tokio Marine & Nichido Fire Insurance said it plans to write global commercial business in London.

The company, which is the oldest and largest non-life insurer in Japan with a market share of about 25 percent, said it would restructure its FSA-authorised subsidiary, European Nichido Insurance Company Limited and rename it Tokio Marine Global (TMG).

According to Tokio Marine, TMG will start writing business from 2005 with an increased capital backing of £125mn, subject to FSA approval. Net premium income for the second year of operation is expected to be in the region of £110mn.The operation’s main business lines will be direct and facultative short tail non-casualty business as well as engineering risks and treaty business.

An Asian branch operation writing treaty business is also under consideration, Tokio Marine said.

TMG will have a parental guarantee and will aim for the same Standard & Poor’s “AA-” credit rating as its parent company, Tokio Marine & Nichido, in Japan.

Hirotoshi Murakami, CEO of TMG, commented: “This is a major step forward for expansion of Tokio Marine & Nichido Group’s global commercial business. We will strive to grow TMG to a major profit pillar of the Group. We will make full use of state-of-the-art techniques and know-how, particularly in the field of underwriting and risk management with the aim to build optimum business portfolio and to have the ability to serve clients’ needs.

TMG said its back-office administration will be outsourced to Xchanging as part of what it described as an effort to better manage the cycle.

Japanese expansion into London continued apace with the announcement on Friday that Aioi Insurance Co would launch a non-life carrier from 1 January 2005.

The company said it had been authorised to do so by the FSA and that the new company would be called Aioi Motor and General Insurance.

The company will have initial paid-up capital of £40mn and will target large Japanese corporations operating in Europe, aiming for gross premiums of approximately £80mn in its first underwriting year.

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