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Japan's Meiji Yasuda interested in ANZ's wealth management arm

Meiji YasudaLife Insurance Co. is looking into acquiring 's wealth management business, as it seeks growth to make upfor a shrinking market at home in Japan.

"We have been widely studying candidates includingANZ's wealth management business. But we have not had any actual talks aboutit," a Meiji Yasuda spokesman told S&P Global Market Intelligence onJuly 26.

Two Japanese insurance companies, Meiji Yasuda andMS&AD Insurance GroupHoldings Inc., were reported to be eyeing a possible purchase ofANZ's wealth management arm once it is put up for sale, The Australian said July 21, without citing a source.

A spokeswoman for MS&AD told S&P Global MarketIntelligence that the insurer is not interested in the asset.

In March, ANZ had announced a restructure of its wealth management arm,which develops life insurance and annuity products. An ANZ spokeswoman declinedto comment.

"Japan is the second biggest insurance market in theworld by value. Small companies with some expertise would be able to find roomto grow. But it's probably difficult for big companies given the shrinkingpopulation," said Teruki Morinaga, an analyst at Fitch Ratings.

Looking abroad, Australia makes sense as a target for bigcompanies, as a developed country with little regulatory risk, and purchasedcompanies can start contributing to earnings immediately, said Morinaga.

Japanese insurance companies have led an overseasacquisition rush in the past few years, but there has been no life insuranceM&A announcement so far in 2016. The lull could be partly due to theunclear outlook of the global economy, punctuated by a few surprises in thefirst half, including the Bank of Japan's negative interest rate announcementin January and the U.K.'s decision to exit the European Union in June.

But the situation is not entirely negative for potentialbuyers, said Nobuyasu Uemura, an analyst with Capitas Consulting, as there maybe fewer buyers in the market, and competition for targets could be lessintense. "Especially for Japanese insurers, the situation could workpositively for them, because price expectations have been very high after aseries of big overseas deals in the past few years."

In 2015, the combined value of Japanese insurers' announcedpurchases of foreign companies in the same industry, as well as a few minoritystake investments, was more than US$23 billion, according to compiled by SNL Financial, anoffering of S&P Global Market Intelligence.

Meiji Yasuda was part of that shopping spree, announcing inJuly 2015 it would buy StanCorpFinancial Group Inc. in the U.S. for US$5.00 billion. The deal wascompleted in March.Meiji Yasuda currently owns or has a significant stake in seven foreigninsurance companies in five countries.