‘Exporter of capital’ Japan here to stay, set to ignite APAC M&A in 2026

January 6 2026 by

Japan will be an “engine” of M&A in the Asia Pacific in 2026 as carriers accelerate the deployment of billions of dollars of capital abroad after being forced by regulators to unwind their domestic crossholdings, according to dealmakers.

In 2026, demand for growth amid a global insurance market softening, changes to solvency and ownership regimes, and the need for Japan’s carriers to redeploy capital abroad are expected to be major drivers of deal-making in APAC.

“One of the busiest countries in the region remains Japan,” said Peter Guenthardt, head of APAC global corporate and investment banking at Bank of America in Hong Kong.

“That is there to stay. It is driven by a secular shift, and the corporate governance changes in Japan are driving a lot of the activity.

“We see a lot of unwinding of cross-shareholdings. On the ECM side, there are hundreds of billions of cross holdings that will be unwound over the next decade.”

The top destination for the recycling of Japanese insurance capital has been the United States, and the trend is expected to continue in 2026.

Last year, there were numerous large M&A transactions by Japanese insurers in the US, such as Sompo’s acquisition of Aspen Insurance, and MS&AD’s minority investments in Barings and WR Berkley.

Tokio Marine also acquired Commodity & Ingredient Hedging for US$970 million, and Ignyte Insurance’s collector vehicle insurance agency business for US$615 million.

“With the geopolitical landscape being clearer, not necessarily easier, boardroom-level discussions around going for big transformational targets are increasing. All of the large Japanese insurance companies are looking at US targets.”

Peter Guenthardt, Bank of America

“Scale is the key thing,” said Andy Tam, co-head of Americas insurance investment banking at Deutsche Bank in New York, speaking on a panel at Insuretech Insights in Hong Kong last month. “The US probably has the deepest universe or the widest universe of scale opportunities.

“With the Japanese transactions into the US, we think that activity is going to continue. US targets generally like selling to Japan if they can get the right premium multiples and generally be left to their own devices for the most part. Japanese acquirers have generally not been very disruptive in trying to run these businesses post-acquisition.”

Given the volumes of capital that needs to be redeployed, the Japanese insurers are on the hunt for big-ticket deals, like the Aspen acquisition, where large amounts of dry powder can be spent in one go.

“With the geopolitical landscape being clearer, not necessarily easier, boardroom-level discussions around going for big transformational targets are increasing,” Guenthardt added. “All of the large Japanese insurance companies are looking at US targets.

“They are also looking at Southeast Asia. Japan is an exporter of capital, and currency fluctuations aren’t a major concern because they take a long-term view.”

Last year was a stronger year for M&A in APAC across all sectors compared to 2024, with US$1.1 trillion of volume in the region, up from US$834.6 billion in 2024 and US799.8 billion in 2023, according to Dealogic data.

“From an APAC M&A perspective, [2024] was a relatively flat year,” said Tom Barsha, head of Asia Pacific M&A at Bank of America in Hong Kong.

“[In 2025], M&A activity has roared back, with volumes up 40%, which is extraordinary and consistent with what we’re seeing globally in the United States and EMEA, with activity levels really coming back.

“Japan is a real engine of M&A in the region these days. There is a lot of activity domestically and cross-border in that market. We’re seeing large, sizable deals every month.”

The uplift in M&A in 2025 was also reflected in the insurance sector in APAC.

In 2025, there were 105 transactions in APAC with an insurance sector target, worth a combined US$16.48 billion, Dealogic data shows, compared to US$15.13 billion via 75 deals in 2024.

Last year had been a “reasonably buoyant” one for insurance M&A in the region, according to Peter Goulston, head of insurance coverage for APAC at BNP Paribas in Hong Kong.

“Going into 2026, the underlying appetite for M&A remains robust, driven by regulatory-driven consolidation, the pursuit of strategic growth, and the desire to diversify across business lines and geographies,” Goulston said.

India, which legalised 100% FDI for insurance companies last month, and Southeast Asia are experiencing strong economic growth and have a rapidly expanding middle class, strengthening demand for insurance products, and global insurers see the region as a vital source of growth at this point in the insurance cycle.

Who’s next?

One of the standout deals in APAC in 2025 was the sale of Liberty Mutual’s general insurance businesses in Thailand and Vietnam to Chubb in March.

“The competitive process for Liberty Mutual’s GI business in Thailand and Vietnam showed that several global insurance companies continue to see Asia as a growth area,” said Edwin Northover, partner at Debevoise & Plimpton in Hong Kong.

“Those players are focused on markets that matter for them strategically rather than generic flag-planting.”

The dynamic region is expected to continue to attract inbound interest from international insurers, although Southeast Asia suffers from a shortage of viable M&A targets, particularly for the Japanese carriers, who are on the hunt for big-ticket deals where large amounts of capital can be deployed, and full control can ideally be achieved, according to a senior executive at a major Japanese insurer.

For the time being, the US and other mature markets, such as the UK and continental Europe, will be the destination for the bulk of the outbound M&A flowing from Japan, although this is expected to change over time as foreign ownership and regulatory capital rules rapidly evolve across APAC.

Jurisdictions across the region are transitioning to risk-based capital regimes for insurers, fuelling a need for bigger and stronger companies, and creating M&A opportunities.

Indonesia, for example, is phasing in higher paid-up capital requirements for insurers and reinsurers, and its sovereign wealth fund announced in June to consolidate three state-owned reinsurers into a single entity.

“The ongoing switch to new solvency regulations around the region will likely have an effect on margins and cost of capital for smaller players, and could spur further M&A,” Northover added.

“We expect to see consolidation in several markets as scale becomes more important.”

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