TOKYO -- Tokio Marine Holdings is about to take a big step into Africa's insurance market. The Japanese insurer aims to invest about 40 billion yen ($359 million) in a major South African insurance group through which it will sell life and nonlife policies in 50 countries, covering most of the continent.
Tokio Marine, which will target individuals and small to midsize businesses, envisages demand in the region to grow significantly on the back of rapid population growth.
The company is expected to become the first major Japanese financial company to make a large investment on the continent.
It is in the final phase of talks to provide a capital boost to Hollard Holdings and Hollard International, aiming to acquire about 22.5% of each. It plans to complete the investments by the end of this year, making the acquisitions equity-method subsidiaries.
Both South African companies operate life and nonlife insurance businesses, with Hollard Holdings covering South Africa and Hollard International serving six sub-Saharan countries, including Botswana and Mozambique.
The two companies' combined premium revenue, a rough equivalent of sales at other businesses, was 200 billion yen in fiscal 2017.
Tokio Marine already has a business tie-up with the Hollard group. After the investment, the partners will jointly develop insurance products and services geared toward local needs and work to open new markets.
Until now the Japanese insurer has focused on selling policies on the continent through Japanese companies operating in Africa.
For individual customers, Tokio Marine will focus on small-amount and short-term policies, where Hollard Holdings and Hollard International have a good track record.
The first step is to win over middle- or lower-income customers with low-premium life policies and other products.
The company will also pitch automobile insurance policies.
For corporate customers, it will offer property damage policies and fire insurance.
Africa's insurance market jumped 12% in 2017, to 7.4 trillion yen, according to Swiss Re, the Zurich-based reinsurer.
The market is expected to continue on a high-growth trajectory over the medium to long terms.
Africa currently accounts for less than 2% of the global market, making it the industry's "last frontier."