Tokio Marine Holdings will acquire the medical stop-loss insurance business of American International Group, continuing its aggressive overseas offensive.
The deal will be Tokio Marine's largest acquisition of a business division from a foreign peer.
Tokio Marine will buy the business via its US subsidiary HCC Insurance Holdings, likely for just over JPY30 billion (US$266 million), reported The Nikkei.
Medical stop-loss insurance, a common arrangement in the US, covers claims above a certain cost for companies and organisations that fund their own employee insurance plans. Such specialty insurance products are HCC's forte. Tokio Marine's premium income from US medical stop-loss coverage, including at HCC, grew 4% to around $1 billion in 2016.
The market for such coverage is growing as medical advances send costs skyrocketing. The business is the largest source of premium income for HCC, which ranks fifth in the US market for such operations and likely will rise to third with the addition of AIG's operations.
AIG has shed businesses in recent years to sharpen its focus on casualty insurance. The group had sought a buyer for its medical stop-loss operations.
Tokio Marine has been more aggressive than other Japanese nonlife insurers in expanding abroad. By strengthening its US presence, Tokio Marine hopes to spread out the risks it faces in disaster-prone and ageing Japan.