19 Aug, 2021 –
The head of one of Japan’s biggest and most conservative insurance groups is looking to roll out nursing and preventive healthcare services in ageing societies around the world in a bid to become a global giant. Kengo Sakurada, chief executive of Sompo Holdings, told the Financial Times that the group’s pivot away from its traditional business of accidents and disasters would be shaped around the expression “Vuca”. The term was coined by the US military to refer to volatility, uncertainty, complexity and ambiguity.
“There is plenty of room for us to change ourselves and transform ourselves into something new,” Sakurada said. “Because if we continue to be just a traditional insurance player, I don’t think we can be number one in the world.” Sakurada added that he would also consider overseas deals in a quest to capture more customers. Sompo has allocated ¥600bn ($5.4bn) for “growth investments” over the next three years. In 2016, Sompo bought Bermuda-based rival Endurance for $6.3bn, a deal that transformed its portfolio and became a template for the company’s technique of rapidly rebranding and integrating its acquisitions.
That has historically not been a strength of Japanese groups when it comes to overseas mergers and acquisitions. Through M&A, the group wants to double the ratio of revenue it generates outside of Japan to more than 30 per cent by the fiscal year ending in March 2024. “We have to be gigantic to survive in this insurance business world. Our size, already one-third of [Japanese] market share, is not enough at all,” Sakurada said. Sompo last year invested $500m in US data analytics group Palantir, co-founded by billionaire Peter Thiel. The two have formed a joint venture as the insurer aims to leverage Palantir’s technology to transform Japan’s fast-growing but lossmaking $90bn nursing care industry.
Sompo entered that industry in late 2015 through a spate of domestic acquisitions that have made the group the country’s second-largest provider of nursing care services. With Palantir, it is using troves of data collected in nursing homes to improve the productivity of care workers and analyse the wellbeing of patients. At some point in future, Sompo envisions creating an insurance package that can predict the progression of dementia and allow patients to plan how long they can keep driving for without getting into an accident. Long-term, the company hopes to build a $5bn business using various data platforms including the one it is working on for the nursing care industry.
According to Sakurada, Japan’s rapidly ageing society provides both a challenge and an opportunity to create businesses that can eventually be taken to China and other countries facing similar social issues. “If we’re successful in Japan, that model and knowhow can be exported to developed countries and also developing countries,” he said.