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Apollo hunts for Japanese life insurer to boost growth

US asset manager may face regulatory hurdles amid preference for domestic players
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{"text":[[{"start":10.9,"text":"Apollo is hunting for a Japanese life insurer to gain market share in the world’s largest ageing economy, as it hits limits to growth in the US and European markets."}],[{"start":19.450000000000003,"text":"Apollo has explored buying the life insurance subsidiaries of T&D Holdings and Orix, according to two people familiar with talks, as it seeks faster expansion in that market. The moves come despite Athene, the insurer owned by Apollo, having signed offshore reinsurance deals worth about $19bn with Japanese groups, as of September last year."}],[{"start":41.150000000000006,"text":"At least one planned deal by Apollo has encountered resistance from Japanese regulators, the people said."}],[{"start":47.7,"text":"Apollo is seeking to buy a licensed insurance entity that can write business in Japan directly, rather than using reinsurance arrangements to sit behind business that is originated by onshore insurers."}],[{"start":58.6,"text":"The New York-based asset manager looked at T&D subsidiaries Taiyo Life and T&D Financial Life (TDFL), the people said. SoftBank-owned PayPay, a payments company, said last week that it would acquire TDFL."}],[{"start":74.6,"text":"Japan’s Financial Services Agency had been sceptical of a takeover by an overseas private capital firm such as Apollo, the people said."}],[{"start":83.1,"text":"“There was definitely a very strong preference for [TDFL] to go to a Japanese player,” said a person familiar with talks."}],[{"start":90.75,"text":"The FSA said it did not comment on individual cases."}],[{"start":94.6,"text":"Apollo had also looked at buying a life insurance subsidiary of Orix, the Japanese investment firm, two people said. Those talks were in their early stages, they added."}],[{"start":103.85,"text":"Apollo and Orix declined to comment. T&D did not respond to a request for comment."}],[{"start":109.6,"text":"Japan is one of the world’s biggest insurance markets, with ¥36.8tn ($230bn) of total premium income — a measure of revenue — as of the end of 2024, according to the Life Insurance Association of Japan."}],[{"start":124.94999999999999,"text":"Along with rivals such as KKR, Apollo is looking for a path to grow more quickly in Japan amid saturated demand for retirement products in the US. It has also hit resistance from European regulators."}],[{"start":138,"text":"After becoming the biggest seller of retail annuities in the US, Athene has increasingly relied on selling funding agreements to banks and other institutional investors, but issuance has been lumpy."}],[{"start":150.25,"text":"In February, Apollo chose Tokyo as the destination for an all-partner trip it holds every two years. Apollo president Jim Zelter said on an earnings call in May that the business was adding “dramatically” to insurance and retirement products in Japan."}],[{"start":165.3,"text":"As private capital groups have muscled into life insurance — by buying insurers outright or taking over chunks of their business through reinsurance transactions — many have rotated their portfolios from safer bonds into higher-yielding private credit investments, pocketing returns above promises to policyholders."}],[{"start":183.15,"text":"These more aggressive investment strategies — as well as a handful of highly publicised blow-ups, such as the failure of private equity-owned Italian life insurer Eurovita — have triggered heightened scrutiny from regulators. "}],[{"start":195.05,"text":"In an effort to distinguish Apollo, chief executive Marc Rowan has also positioned himself as a critic of some insurance strategies used by rivals."}],[{"start":205.15,"text":"“This is not about PE-backed insurers, it’s about insurers. For us, no Cayman [Islands], no collateral loans, no games — just straightforward business,” he said on the May earnings call."}],[{"start":216.4,"text":"In the UK, where Apollo-backed insurer Athora recently acquired a pension risk transfer specialist, regulators have announced that they would raise capital requirements for offshore reinsurance agreements. Those moves involve insurers shifting liabilities and the assets backing them to counterparties in foreign jurisdictions such as Bermuda and the Cayman Islands."}],[{"start":236.95000000000002,"text":"Rowan said he believed the UK regulator’s proposed changes would be “beneficial to people who are actually running a proper business”."}],[{"start":244.85000000000002,"text":"In Japan, where the FSA also earlier this year proposed new rules targeting reinsurance, Rowan said: “We have seen, like in many other jurisdictions, companies make use of offshore-funded reinsurance . . . with credit counterparties who are not quite where they should be.”"}],[{"start":262.1,"text":"This article has been amended to correct the spelling of Jim Zelter’s surname"}],[{"start":273.9,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1781069048_1360.mp3"}

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