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No. 354, March 1999

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American Companies in Japan


FINANCIAL SERVICES

Despite a proliferation of transpacific alliances over the last year or so, the asset-management expertise of American financial services providers still is in demand in Japan. One of the latest tie-ups brings together the investment management affiliates of METROPOLITAN LIFE INSURANCE CO., the number-two American life insurance company, and ASAHI MUTUAL LIFE INSURANCE CO., the fifth-largest Japanese life insurer. Boston-based NVEST COS., L.P. will take a 49 percent interest in a company to be formed in June with ASAHI LIFE INVESTMENT MANAGEMENT CORP. to provide investment management services to institutional and individual Japanese investors. Technically, the joint venture will manage assets for ALIMCO and Asahi Life, but in reality, Nvest, which had $135 billion in assets under management at the end of 1998, will perform much of this work. The unnamed new company also will manage ALIMCO and Asahi Life investment products for the pension market. Once deregulation gives life insurers the right to handle a wider range of investment vehicles, the pending partnership will develop, manage and market investment trusts (Japanese-style mutual funds) for Asahi Life. In the meantime, MetLife and Asahi Life will explore other opportunities for collaboration.

Building on an existing relationship with YASUDA FIRE & MARINE INSURANCE CO., LTD., Los Angeles asset manager THE TCW GROUP, INC. will acquire a 30 percent stake in the number-two property and casualty insurer's YASUDA KASAI GLOBAL ASSET MANAGEMENT CO., LTD. subsidiary. The cost of this transaction was not disclosed. TCW also will provide selected investment products and research services to YKAM, which has about $7 billion in assets under management, to help it expand its institutional and retail asset management business. TCW already manages a $100 million mortgage-backed securities mutual fund for YKAM and recently was tapped to manage two new investment trusts that its partner plans to launch as well as some money for Yasuda Fire & Marine Insurance. TCW manages more than $50 billion in largely institutional assets.

Hoping to capitalize on the recent interest in Japanese stocks, five local securities companies have started marketing growth stock and small-cap investment trusts developed and managed by FIDELITY INVESTMENTS JAPAN LTD. The brokers are OKASAN SECURITIES CO., LTD. and four smaller rivals: COSMO SECURITIES CO., LTD., JAPAN INVESTORS SECURITIES CO., LTD., MARUSAN SECURITIES CO., LTD. and YAMATANE SECURITIES CO., LTD.

NIKKO SALOMON SMITH BARNEY LTD. is in business. The company, announced last June (see Japan-U.S. Business Report No. 346, July 1998, p. 15), is 49 percent owned by SALOMON SMITH BARNEY INC., which now is part of CITIGROUP INC., with the balance held by NIKKO SECURITIES CO., LTD. NSSB took over the number-three Japanese brokerage house's investment banking and institutional trading operations, freeing Nikko Securities to focus on its retail business. Salomon Smith Barney folded into the 1,100- employee company almost all of its Japan-based investment banking and securities operations. Although the American firm is the minority partner, analysts expect it to be the main decisionmaker.

Year-old GE CAPITAL EDISON LIFE INSURANCE CO., which took over all new policy writing from TOHO MUTUAL LIFE INSURANCE CO. (see Japan-U.S. Business Report No. 342, March 1998, p. 15), has opened a service center in Yokohama. The new office is in charge of underwriting and claims processing as well as operating the company's data base system. A call center will be added in the future to handle direct marketing.

GE CAPITAL CONSUMER FINANCE CORP., one of three consumer finance companies that GE CAPITAL CORP. owns, has decided to outsource its credit-card operations to CREDIT SAISON CO., LTD. The big consumer credit firm will handle all back-office functions, including applications and debt collection, thereby freeing GE Capital Consumer Finance to focus its resources on promoting a new credit card. Customers of GE Capital's other subsidiaries in Japan, including GE CAPITAL EDISON LIFE INSURANCE CO., LAKE CO., LTD. (see Japan-U.S. Business Report No. 351, December 1998, p. 15) and KOEI CREDIT K.K., provide a ready-made marketing target. Credit Saison also operates the card-card business of AIC CORP., the subsidiary of Dallas-based ASSOCIATES FIRST CAPITAL CORP.

An exchange rate of ¥117=$1.00 was used in this report.aaaaaa

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