Tokio Marine to Sell Stake in Brazilian Life Insurer

Tokio Marine Holdings Inc. [50962] said it will sell its Brazilian pension and life insurance subsidiary, Real Tokio Marine Vida a Previdencia S.A. [77769] to Banco Santander S.A. for R$678 million (US$285 million).

The Japanese insurance group expects to make a profit of 12 billion yen (US$121 million) from the sale of its 50% stake in the Brazilian pension and life insurance unit, held by Tokio Marine Seguradora S.A. [84237]. The transaction earnings will be realized on its financial result for the 2008 fiscal year which ends March 2009, said Tokio Marine.

ABN Amro Brasil Dois Participacoes S.A., a subsidiary of Banco Santander S.A., owns the other 50% stake at Real Tokio Marine. The pension and life insurer earned R$1.7 billion in premium and pension income for the fiscal year ended December 2008, and its total assets stood at R$6.7 billion.

In Brazil, the Tokyo-based insurance group operates nonlife and life insurance business under its two subsidiaries: Tokio Marine Seguradora S.A. and Tokio Marine Brasil Seguradora S.A. [87990].

As part of its strategic plan in the medium term, Tokio Marine puts overseas expansion as a key driver for business growth. By 2011, it plans to increase the business share of overseas operations from 21% in 2007 to 27%, totalling 60 billion yen in earnings. The publicly-listed insurer also plans to grow its share of the domestic life insurance business in Japan from 10% in 2007 to 18% in 2011, with total earnings of 40 billion yen.

A weakening economic outlook for equity markets, interest rates and exchange rates have caused Tokio Marine to make a downward forecast for its financial result this year. Tokio Marine expects to post a 95.4% drop in net income to 5 billion yen for the 2008 fiscal year which ends in March 2009.

In the first three quarters of the 2008 fiscal year, the insurance group made 4.6 billion yen in net income, down 97% from 133.5 billion yen a year ago.

Deteriorating financial conditions and a strong yen in relation to other currencies have adversely affected the consolidated business performance of the insurance group. Tokio Marine's total assets fell to 15.5 trillion yen in December, down 1.8 trillion yen from March 2008. "Declines in the values of securities and a decrease in securities borrowing transactions" attributed to the plunge in investment assets, said Tokio Marine.

Tokio Marine & Nichido Fire Insurance Co. Ltd. currently has a Best's Strength Rating of A++(Superior).

(By Iris Lai, Hong Kong bureau manager: [email protected])