Japan's Sony Life Insurance Co. Ltd. [85855] and Dutch insurer Aegon N.V. [85244] have gained approval from the Japanese regulator, the Financial Service Agency, to start their joint venture's business operation later this year.
Sony Life and Aegon each owns equal shares at Aegon Sony Life Insurance Co. Ltd., which will focus on the sale of variable annuity products in Japan. With total capital of 20 billion yen (US$213 million), the new company will have 124 employees.
The new venture was originally planned to roll out in 2008 but the approval was delayed in the wake of the global financial crisis. Distribution channels will be riding on Sony Life's existing sales agents, as well as banks and other financial institutions.
Sony Life President Taro Okuda said the new annuity venture will enable the insurer to "fully enter into the bancassurance business," while enhancing product offerings for Sony Life's sales network.
Aegon Chief Executive Officer Alex Wynaendts said Japan's variable annuities market offers "strong prospects for growth over the long term." Japan is one of the largest pension markets in the world.
Despite the financial crisis, demand for variable annuities in Japan is expected to grow in the years ahead, supported by the country's aging population with greater demand for long-term savings to supplement state pensions, said the insurers in a statement.
This year, life insurers like ING Life Insurance Co. [90080]; Hartford Life Insurance KK, a Japanese subsidiary of U.S.-based Hartford Financial Services Group [58707]; Sumitomo Life Insurance Co. [85054]; and Allianz Life Insurance Japan Ltd., a unit of Allianz S.E. [85014], halted sales of variable annuities in Japan (BestWire, May 15, 2009).
Aegon Sony Life is expected to commence business in early December. Japan's aging population -- with more than 40% of the population currently older than the age of 50 -- drives the need for long-term savings. The country already has a significant proportion of individual savings in cash or deposits.
Japan has the largest pool of personal financial assets in Asia, which is projected to reach nearly US$19 trillion in 2017, said the insurers.
(By Iris Lai, Hong Kong bureau manager: [email protected])