FISNet Company Visiting - Mitsui Sumitomo Insurance

                                             

On March 15^th 2016, Mr. Fusato Suzuki along with FISNet members visited Mitsui Sumitomo Insurance. Mr. Morikiyoshi Yuki and Mr. Kageyama Kenichi were the representatives of the company, and FISNet members were treated with warm welcome.

           Each year, around 30 flights of rocket have been launched to space in order to conduct scientific experiments that will lead humanity to be greater civilisation. Within the 30 launches, about 1 – 2 launches are unsuccessful. That is about a 5% failure rate. The question is: “Who is there to insure those failures?” This is where the insurance company comes into play.

There are two types of insurance: life insurance and non-life insurance. In Japan, there are fifty two non-life insurance companies licensed by the Japan Financial Service Agency. However, only three major groups hold the majority share of the market. These three groups are: MS&AD Group, Tokio Marine Group and SJNK Group. Mitsui Sumitomo Insurance belongs to MS&AD Group, which deals with non-life insurance, such as car insurance, marine and fire.

With the world changing rapidly, these insurance companies are trying to find the new risks in order to insure those new insecurities. The dangers do not come from only car accidents, marine-related accidents, or fires anymore. As the world evolves, the risks involved also evolves. Coming back to the rocket launching scenario, this is why space agencies are willing to fork out $3 billion just for launching insurance.

             As Japan is a developed country with high economic power, Japan comes in fifth place in The Global Share of General Insurance Market, behind the United States, China, Germany and the United Kingdom. MS&AD Insurance group is the seventh biggest insurance group in the world, with  the top place taken by Berkshire Hathaway. The company is always looking for opportunities to expand its market share. However, with the population of Japan declining, Mitsui Sumitomo Insurance is shifting its focus toward other countries in Asia as their main target.

MS&AD has around 93,000 employees worldwide in 42 countries, with 8,200 employees being overseas staff. For global expansion strategy, MS&AD Holdings uses “tripolar system” where there are three sub holdings below the main holdings: Asian Holdings, European Holdings and American Holdings. With Asia as a main target of expansion, Asian Holdings companies are ranked top ten among major South East Asia countries, such as Malaysia, Philippines, Singapore, Thailand, Indonesia and Hong Kong. MS&AD group is also aware of dramatically growing Chinese and Indian markets. The company has strong networks in China, and more than 90 offices in India.

While many companies are trying to minimize and avoid risks, non-life insurance company such as Mitsui Sumitomo Insurance is constantly searching for new possible risks in order to insure the security. In the past, the insurance covered damages from marine and fire. With the world evolving rapidly nowadays, new risks appear, and new challenges occur for Mitsui Sumitomo Insurance to keep providing world class securities to all of us. 

FISNet members would like to thank Mr. Morikiyoshi Yuki and Mr. Kageyama Kenichi for making this company visit such an wonderful and educational experience. We would also like to give special thanks to Mr. Fusato Suzuki for arranging the company visit, and making this happen. We are looking forward to the next company visits. Thank you!!!

By Pasith Tangdhanakanond (Leo)
TUFSA Media Team Coordinator

FISNet Company Visit to TICC

Tohoku Innovation Capital Corporation (TICC)

Nowadays, the growth of Japanese economy is declining. While there may be many reasons, the country is pushing its technological advancement to another level as they believe this will bring back the prosperous economy once again. Downtown of Sendai city lies a company called Tohoku Innovation Capital Corporation (TICC), an important part of the force in Tohoku region which contributes in gaining back Japan’s economic prosperity. On March 1^st, members of FISNet led by vice president of FIDEA Holdings, Mr. Fusato Suzuki, visited the company in order to exchange ideas, visions, and broaden the views of FISNet members on Japanese society.

Established in 2003, Tohoku Innovation Capital Corporation is a venture capital investment company which invests in high-technology businesses and companies. The company has a simple looking office in a classy skyscraper located in Honcho, Aoba-ku, and also has another office located in Aobayama campus, Tohoku University. Eight board members and nine staff members make up the company which is led by the president of the company, Mr. Ko Kumagi. The goal of the company is to vitalise the regional economy in the Tohoku region by incubating and developing new businesses. So far, three main funds were raised in the year 2004, 2006 and 2007 respectively. The company is investing heavily on electronics, Bio/medical and precision process/testing, followed by precision machinery, material, IT software and environment.

The host of the company visit was the vice president himself, Mr. Kazuyuki Igarashi. Mr. Igarashi is an experienced businessman who understands the situation of high technology industry in Japan very well as he used to work in many different regions of the country in his early days. The man also spent some amount of time in his life making his fortune in the United States.

The two gentlemen in front: on the left is Mr. Kazuyuki Igarashi and on the right is Mr. Fusato Suzuki. 

Mr. Igarashi stated that the most challenging factor investing in high-technology industry is “time”. The businesses rely heavily on research and development, which usually requires a long period of incubation time before the investors will gain any return from their investments. Mr. Igarashi also mentioned that another problem is the lacking business management ability of the companies’ leader as they are mostly scientists and engineers. Therefore, hiring external CEO and business teams are necessary in order to prevent companies from failing.

When asked about the funding process, Mr. Igarashi said that it usually starts from a university professor establishing a company with their own initiatives. The professors have an advantage as they are in the circle of experts, and possibly run one of the university laboratories. Although, professors are allowed to work two jobs simultaneously, they have to keep the university’s research separate from company’s research. In Tohoku region, four companies are funded by Tohoku Innovation Capital Corporation, and have been under the incubation right from the start. Two of them are professors from Tohoku University, one from Fukushima University and another one from Yamagata University. One of the professor from Tohoku University has achieved great success, and earned tremendous amount of fortune from developing high-technological tools which aids the bio-medical industry.

While there are some success stories, the bigger picture is still not clear. There were more than hundred potential companies which Tohoku Innovation Capital Corporation was interested in investing, but only forty five companies made it. Amongst those forty five, only few have managed to be profitable companies so far.

As challenging and risky as it sounds, it is reasonable to think that alternative investments in the service sector could have been made as it is the biggest industry in Tohoku region. Mr. Igarashi explained that while the service sector may be less risky and gives faster return, the growth of the industry is asymptotic. The industry would stop growing as time approaches the growth limit. Mr. Igarashi used the example of Izakaya (居酒屋), the fondest business by male Japanese entrepreneurs. The fact that number of Izakaya chains Tohoku region is increasing does not necessarily mean that the industry would earn more profit as the customers would not pay to drink more. They would rather visit their regular store.

           Mr. Igarashi left an important message at the end of company visiting by saying that Japanese investors are working hard toward a better economy. The investment culture of the country is slowly changing. Investment tax credit has began use in Japan since two years ago. Moreover, the number of angel investors in Japan is growing. Each region in Japan has few venture capital investors who are scouting for potential high-technology businesses as Tohoku Innovation Capital Corporation does in Tohoku region.

By Pasith Tangdhanakanond (Leo)

TUFSA Media Team Coordinator