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Business deals

Tokio Marine to sign $370m partnership with top Brazil bank

Joint venture eyes top share in South American country's fire insurance market

Tokio Marine seeks emerging-market growth as disaster-related payouts rise in Japan.

TOKYO -- Tokio Marine Holdings will form a home insurance provider in Brazil with one of the country's top banks, seeking emerging-market growth as disaster payouts rise in Japan.

In a deal revealed by Nikkei and announced on Tuesday, Tokio Marine will establish a joint venture with local bank Caixa's insurance unit, Caixa Seguridade, investing 39.5 billion yen ($370 million).

The venture will offer fire insurance packaged with policies that pay off policyholders' mortgages if they die. It aims to clinch the biggest share of this market segment.

Rio de Janeiro: Brazil forms a growing part of Japanese insurance group Tokio Marine's overseas business.   © Reuters

Caixa, which holds about a 70% share of the South American country's home loan market, joins hands with Tokio Marine as part of an organizational overhaul. The Brazilian company previously sold home loan insurance through a joint venture with French provider CNP Assurances.

For Tokio Marine, the move continues an ambitious foreign expansion campaign. Japanese insurance payouts related to natural disasters are expected to top 1 trillion yen for the second consecutive fiscal year, adding urgency to the company's efforts to diversify its earnings base beyond its home market. The past year alone brought landfalls by typhoons Faxai and Hagibis.

Tokio Marine has spent about 2 trillion yen on large overseas acquisitions since 2008. The company announced plans in October to buy U.S. insurer Pure Group for $3.1 billion. Foreign operations now produce half of the Japanese insurer's consolidated net profit.

But Tokio Marine has focused on U.S. and European acquisitions at the expense of emerging markets. The company's non-life insurance business in Brazil earns net profit of nearly 10 billion yen annually, or half the earnings produced from emerging nations and Asian countries outside Japan.

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