Japan’s Sompo to focus on integration after acquisition spree

By Makiko Yamazaki and Ritsuko Shimizu

TOKYO (Reuters) – Sompo Holdings Inc will place more focus on integrating domestic and overseas operations for further growth after a spell of acquisitions abroad boosted the global presence of Japan’s No. 3 non-life insurer group, a senior executive said.

“We rapidly shifted capital allocations to overseas to secure a foothold in growth markets, with a sense of emergency over a rapidly aging home market,” the group’s chief operating officer Mikio Okumura told Reuters.

“Now that our non-life insurance business overseas has grown almost to the size of the domestic business, we no longer have to differentiate strategies for overseas and domestic operations,” he said.

Sompo accelerated its global push through its $6.3 billion acquisition of U.S. property and casualty insurer Endurance Specialty Holdings in 2017, which gave the Japanese company a much-needed U.S. foothold.

It also bought five more companies over the last five years, including U.S. agriculture insurance company Diversified Crop Insurance Services in 2020.

Sompo forecast adjusted consolidated profit of 100 billion yen ($746 million) for the overseas insurance business in the year ended in March. The group’s overall adjusted consolidated profit is estimated at 160 billion yen.

Okumura said he does not see an imminent need for further acquisitions.

“We could achieve organic revenue growth of some tens of billions of yen in a year or two by hiring a team of professionals instead of rushing for more deals,” he said.

To deepen integration within the group, it plans to globalise capital allocations and product launches, as well as to conduct analyses of risks on a global basis such as cyber attacks, he said.

At home, Sompo is working to grow nursing care services for the elderly as a future pillar and to eventually sell its software-driven data platform globally for predictive care that helps improve productivity of care services.

The nursing care business is targeting annual revenue of about 30 billion yen by 2030 for the data platform. “We want to present our own solutions to the aging society,” Okumura said.

(This story has been corrected to specify that the nursing care revenue target is for the data platform in paragraph 11)

($1 = 134.0700 yen)