Further expanding its ties with US
insurer Northwestern Mutual, Nippon Life, Japan’s biggest life
insurer, has invested $250m in 30-year surplus notes issued by the
mutual insurer.
The notes bought by Nippon Life formed part of
a total issue of $1.75bn. Surplus notes are a subordinated debt
instrument usually, but not exclusively, issued by mutual
insurers.
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Nippon Life and Northwestern first established
ties in July 2008 to assist each other in pursuing investment
opportunities in their respective home countries. At the time,
Nippon Life also acquired a 5% equity stake in Russell Investments,
a Northwestern unit.
Purchase of the surplus notes follows Nippon
Life’s purchase in September 2009 of a $500m 10-year exchangeable
surplus note issued by Prudential Insurance Company of America, a
unit of Prudential Financial.
Under terms of the transaction, Nippon Life can
exchange the note for Prudential Financial ordinary shares after
five years. Nippon Life already has a stake of about 0.6% in
Prudential Financial.
In the US, Nippon Life also holds a 7% stake in
financial conglomerate Principal Financial Group and operates
directly in the US via health insurance unit, Nippon Life
Benefits.
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