Japanese multinational Tokio Marine is weighing potential acquisitions of Insurance Australia Group (IAG) and Suncorp, with either deal potentially valued at more than A$20bn (US$14bn), The Australian reported.
IAG has appointed Goldman Sachs as an advisor for any potential negotiations, according to DataRoom, while Suncorp has been close to Barrenjoey, UBS and JPMorgan.
IAG said it has not received any inbound approaches from Tokio Marine and declined to comment further, while Suncorp also declined to comment.
The speculation comes as Tokio Marine looks to deploy excess capital and pursue a major entry into the Australian market. Analysts have described the Japanese insurer’s interest in Australia as an open secret, with the group seeking acquisitions to diversify its overseas earnings.
Tokio Marine president and CEO Masahiro Koike said last month that the insurer was exploring acquisition opportunities in Australia, Canada and Southeast Asia. The group’s partnership with Berkshire Hathaway, announced in March, is expected to provide additional financial flexibility for larger transactions.
Both IAG and Suncorp have market capitalisations of around A$20bn, placing them within the range of Tokio Marine’s acquisition ambitions. However, market views remain divided on the preferred target, with some pointing to IAG and others suggesting Suncorp is the more likely candidate.
IAG has emerged as a potential target after largely resolving its exposure to the collapse of Greensill Capital through a confidential settlement of an A$4bn lawsuit involving Greensill Bank, according to the report.
The insurer is Australia and New Zealand’s largest general insurer, with brands including NRMA Insurance, CGU and NZI.
Suncorp, which focuses heavily on home, contents and motor insurance, has also attracted interest following the sale of its banking arm to ANZ for A$4.9bn in 2022. However, a deal could face greater regulatory and political scrutiny given its strong presence in Queensland, the report said.
For the six months ended December, Suncorp reported a 76% decline in net profit to A$263m, impacted by higher natural hazard costs and lower investment returns. IAG reported a 35% fall in half-year net profit to A$505m.
