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Press Releases

Mitsui Sumitomo Insurance Announces Strategic Alliance with Leading Life Insurer in Indonesia

May 2, 2011

Mitsui Sumitomo Insurance Co., Ltd.

Mitsui Sumitomo Insurance Co., Ltd. (President: Yasuyoshi Karasawa, hereafter “MSI”), has reached an agreement to form a strategic alliance with PT Asuransi Jiwa Sinarmas (“Sinarmas Life”), a leading Indonesian life insurer under one of the largest Indonesian business groups, Sinar Mas.  MSI will subscribe to new shares issued by Sinarmas Life in a third-party allotment and enter into the life insurance business in the Indonesian market as a 50% shareholder of Sinarmas Life, subject to approval of Indonesian Ministry of Finance (Indonesian life insurance authorities).

Through this strategic alliance, MSI aims to further expand its business platform in rapidly growing Asian markets.

1.Overview of the Strategic Alliance

MSI will solely subscribe to new shares of Sinarmas Life (a private company) through a third-party allotment.  The amount to be invested is 7 trillion Indonesian Rupiah (approximately 67.2 billion Japanese yen).  Following the transaction, Sinar Mas Multiartha (a financial holding company of Sinar Mas Group) and MSI will each have a 50% stake.  After the strategic alliance, Sinarmas Life is scheduled to change its corporate name to PT Asuransi Jiwa Sinarmas MSIG (“Sinarmas MSIG Life”).

MSI will send board members and staff after completion of its investment and actively be involved in the management.  Contributing a variety of expertise MSI has developed in Japan and overseas, MSI sets out to further strengthen Sinarmas Life’s insurance distribution capabilities of protection products to tap the massive middle-class market, in addition to sales of saving products to its existing high net worth customers.

2.Purpose of the Strategic Alliance

  1. (1) Foray into the Indonesian Life Insurance Market
    While Indonesia has a population of about 230 million (4th globally), the ratio of life insurance premiums to GDP has remained 1 to 2% (cf. 7.2% in the Japanese market).  The country’s real GDP has been growing steadily at over 5% in past five years, and the middle class representing 40% of population is expected to further require life insurance products, therefore the Indonesian life insurance market is expected to grow rapidly going forward.
    Indonesia also has the largest Muslim population in the world and is expected to be a promising market for Takaful insurance (quasi insurance system based on mutual help in the Islamic world).
    Considering these market environments, MSI had thorough discussions to make an entry into the Indonesian market as early as possible and finally has reached the strategic alliance agreement.
  2. (2) Further Expansion of Business Platform in Asia
    MSI has strategically focused on the fast-growing Asian market as a target of life insurance business investment.  In addition to access to the Chinese and Malaysian life insurance markets accomplished by investing in the respective leading local life insurers last year, the investment in Sinarmas Life, a leading life insurance player in Indonesia (ranked 3rd), will enable MSI to significantly enhance its presence in the life insurance business in Asia.
  3. (3) Expansion of Overall Group Earnings
    Through this strategic alliance, MSI aims to further develop Sinarmas Life’s business model by sharing MSI’s products and sales expertise with Sinarmas Life.  By generating synergies from combining the brand strengths and the business platforms of MSI and Sinar Mas Group, MSI strives to expand the business platform and improve profitability of Sinarmas Life, as well as enhance the enterprise value of MS&AD Insurance Group.

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