Nippon Life Insurance Co. (Nissay) plans to invest an additional 23 billion yen in Australian unit MLC Ltd., whose recovery has taken a blow due to the coronavirus pandemic.
The latest installment follows an additional 18 billion yen investment in December 2019. Nissay will consider further investments depending on the unit's business position.
Australian insurers, including MLC, have seen a sharp increase in payments for income-compensation claims due to tighter government regulations and other factors. If the pandemic leads to an increase in the unemployment rate, the payments could balloon further.
With the value of MLC's assets diminishing, Nippon Life decided it needed to strengthen the subsidiary's financial position as soon as possible.
Nissay acquired an 80% stake in MLC in 2016. With domestic insurance contracts sluggish due to the low birthrate and declining population, the company was aiming to diversify its earnings through overseas expansion.
However, Nissay may have to review its strategy as the insurer is expected to see increases in contract cancellations and claims in the future.
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