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Japan and Korea insurers have shown unprecedented demand for M&As and strategic investments overseas in the past few years, targeting opportunities in both developed and emerging markets.

While insurers from these two Asian economies have nuanced appetites and different capital capacity for offshore expansions, Fitch Ratings expects a strong M&A pipeline in the coming years by these major insurers, which would provide an overall credit boost for the sector.

From Domestic Growth to International Growth

Japan and Korea insurers entered the overseas M&A cycle at different times while facing a common hurdle. While they have long enjoyed a large domestic insurance market with strong local demand and profitable growth, these competitive edges have been losing steam given the emerging structural headwinds, eventually pushing insurers to seek alpha elsewhere.

In Japan, the domestic growth outlook has been constrained by demographics and saturation. A shrinking population, which has seen 14 consecutive years of decline, provides lackluster support for the domestic market. Although an aging population and a mix of products has helped in sustaining Japan life insurers’ underwriting profit, Fitch expects these margins to peak over the next 5-10 years given the inescapable demographic challenge.

Meanwhile, Korea also faces similar pressures. Premium growth is moderating amid a super-aged population, low GDP growth, interest rate cuts, and stricter capital standards under the Korea International Capital Standard (K-ICS). Fitch projects the total insurance revenue to rise by less than 5% in 2026, increasing pressure on domestic earnings and reinforcing the rationale for overseas expansion.

Major Japan Insurers are Bullish on M&As in North America

Fitch currently rates many Japanese insurers, including the nations’ largest non-life insurer Tokio Marine & Nichido Fire Insurance Co. Ltd., with an Insurance Financial Strength (IFS) of “AA-“/Stable — as well as the big four major life insurers: The Dai-ichi Life Insurance Company Ltd. (IFS “AA-“/Stable); Meiji Yasuda Life Insurance Co. (IFS “A+”/Stable); Sumitomo Life Insurance Co. (IFS “A+”/Stable ), and Nippon Life Insurance Co. (IFS “AA-“/Stable).

More than half of the Fitch-rated insurers have conducted M&As in the past 10 years, with major deals valued at approximately JPY4.5 trillion (around US$35 billion), and 86% of these investments being U.S. based, according to Fitch’s calculations.

Japanese insurers deem the U.S. market as their most important offshore business hub primarily because the U.S. is the only major developed market larger in size than Japan with a steady population growth. Major Japanese insurance players see having exposure in this market as a huge competitive edge which will meaningfully boost their group earnings.

They also value the predictable operating environment in the U.S., supported by a common business language, transparent corporate law, and strong insurance regulation. Having a major market presence in the U.S. is particularly critical for Japan’s non-life insurers, as North America represents about 40% of global non-life premiums, meaning a success in the U.S. is essential to become a top-tier global player in the sector.

More importantly, a lot of Japanese insurers are actually cash-ready when they are shopping for M&A targets and willing to outbid contenders such as private equity funds. U.S. business structures allow Japanese insurers to acquire 100% ownership of a U.S. insurer should they wish. This contrasts with some parts of Asia where it could be difficult to obtain majority control of an insurer. Such a hurdle has led to unsuccessful transactions, such as Meiji Yasuda Life’s 2023 decision to sell its stake in Indonesia’s PT Avrist Assurance and Dai-ichi Life’s May 2025 announcement to divest its stake in Thailand’s Ocean Life Insurance.

Credit Rating ‘Win-Win’ for Parent and US Subsidiaries

Tokio Marine Group and Dai-ich Life are the two pioneer insurers that entered the U.S. market in the early 2000s. Tokyo Marine Group, in particular, solidified its global insurer status after acquiring three U.S. insurers, paving the way for other sector players to subsequently follow suit.

The M&A momentum continued to build over the years, bringing some recent major deals such as Sompo Japan Insurance’s (IFS “AA-“/Stable) acquisition of Aspen Insurance Holdings Ltd. in 2025 and Nippon Life announcing two acquisitions in 2024, including a JPY 1.2 trillion (USD 8.4 billion) deal to purchase U.S.-based Resolution Life Group (Issuer Default Rating “A-“/Stable). Nippon Life’s transactions set a milestone for Japan insures as it marks the last big Japanese life insurer to enter the North American market.

Japanese insurers tend to have strong credit profiles. These acquisitions show a clear pattern that they intend to maintain such credit profile post-acquisition by strategically targeting high-quality, mid-sized U.S. insurers which they deem as relatively low credit risk. And for non-life insurers specifically, they also show an underwriting preference to avoid large natural catastrophe exposure and commodity-line business to the greatest extent possible. They also favor specialty insurance businesses with strong competitive positions to diversify credit risks.

Aside from the strong credit profiles, Japanese insurers generally have long investment horizons and ample financial resources that enable them to provide sustained capital support to subsidiaries, meaning the credit rating of the acquired subsidiary will also benefit from strong parental support.

For example, after the landmark acquisition of Resolution Life Group by Nippon Life, Fitch upgraded the U.S. subsidiary, reflecting expectation of the entity’s further growth supported by the parent. Protective Life Insurance (IFS “AA-“/Stable) also got a two-notch upgrade after it was acquired by Dai-ichi Life for a similar reason.

In fact, Fitch noted that nearly all U.S. subsidiaries of the Japanese insurers showed sound performance and steady growth, so far, given the strong parental support – a positive trend that is likely to continue.

Korea Insurers’ First 100% Overseas Acquisition

Korea insurers, on the other hand, have been eyeing global expansions instead of targeting the U.S. market like their Japanese peers. Korea insurers used to primarily focus on the Southeast Asian market, particularly Vietnam and Indonesia, and tended to make minority or strategic equity investments.

However, they have shown a clear shift towards larger-scale strategic M&A activity in recent years, reflecting efforts to transform income structures and secure long-term profit bases. Total cross-border M&A transaction value was around US$2.6 billion in 2025, accounting for more than 75% of the total M&A amount over the last five years.

The most active groups are DB Insurance, Samsung Fire & Marine, Hanwha Life (IFS “A+”/Stable), and Samsung Life, pursuing larger deals across banking, brokerage, and specialty insurance.

In the example of Hanwha Life, Korea’s second largest lifer and currently rated by Fitch at IFS “A+” with a stable outlook, has accelerated its push abroad, acquiring a 75% in US brokerage firm, Velocity Clearing LLC and a 40% in Indonesia’s PT Bank Nationalnobu Tbk in 2025, alongside increasing its stake in PT Lippo General Insurance – with national IFS of “AA+(idn)”/Stable – to 62.6% in 2023.

Korea’s foreign M&A activities were brought to a new high when its leading non-lifer DB Insurance Co. Ltd acquired The Fortegra Group Inc., a US-based specialty insurer, in full for $1.65 billion in September 2025. The deal was the first 100% acquisition of a US insurer by a Korean insurance firm and the largest Korean cross-border insurance deal to date.

Fitch views these cross-border moves by Korean insurers as credit neutral to mildly positive in the short term, provided that insurers maintain prudent capital management and robust integration plans. Outbound deals help diversify earnings and mitigate domestic concentration risks, but the benefits remain to be seen over the medium to longer term.

Risks and Opportunities

Fitch expects overseas M&A and strategic investments to remain central to Japanese and Korean insurers’ strategies, meaning more opportunities available for U.S. and European stakeholders to meet long-term buyers should they consider M&As.

The rating agency also expects an increase in subordinated bond issuances related to these acquisitions, particularly by Japanese insurers. Subordinated debts are considered a regulatory buffer and popular tool to maintain capital levels around acquisitions, especially when Japanese insurers’ ample capital rarely require them to take bank loans and issue bonds for funding.

Despite the vibrant outlook for Japan and Korea insurance M&As, the current macro environment, global geopolitical situation and regulatory challenges are adding layers of uncertainty to the sector, testing the resilience of these buyers and their subsidiaries.

Fitch estimates that 20% of major Japan life insurers’ profits currently rely on North America, and a higher ratio for non-life insurers. For instance, Tokio Marine Group reports that around 60% of its group income comes from the U.S., while Sompo Group gets 30% of its income from the U.S., according to its fiscal year closing statements in March 2025.

Should these ratios continue to rise, the associated risks will also increase, impacting the credit profiles of both the parent and the subsidiary. And given Japanese insurers’ heavy exposure in the U.S. compared to Korean peers, they may see a greater spillover impact from potential market-specific headwinds such as shocks from U.S. real estate and private credit.

While diversification may have shielded Korea insurers from market-specific risks, they face a different capital and funding challenge at home. Korea’s business law only allows insurers to finance for limited purposes such as capital adequacy and liquidity management. To avoid short-term borrowing pressures, Korea insurers are mostly relying on their internal liquidity for acquisitions while fulfilling the capital adequacy requirement under K-ICS.

For example, Fitch estimates DB Insurance’s K‑ICS ratio to fall by 15%–20% after the Fortegra acquisition, while Hanwha Life’s ratio declined about 2% following the Velocity acquisition. As large M&As often require substantial capital, these funding constraints can materially weaken the capital buffer post-acquisitions, posing cash-flow risks to the parent and subsidiary should there be adverse scenarios and deteriorating loss ratios. The pace and credit impact of these M&As will therefore depend on the capital adequacy, integration planning, and risk control of the major Korea insurers.

Related:

• Viewpoint: Japan’s $550B Bet on America—What it Means for the US Insurance Market
• Insurance Industry ‘Megadeals’ Dominate 2025, Says PwC

Topics USA Mergers & Acquisitions Carriers