TOKYO - Toyota Motor Corp. last week paid nearly $300 million to acquire a controlling stake in a new insurance company to be created by the merger of two insurers, one of which Toyota currently controls.
Toyota paid ¥35.9 billion, or $299 million at current exchange rates, to raise its stake in Chiyoda Fire and Marine Insurance Co. from 44.7 percent to 49.9 percent and to buy a stake of 19.3 percent in Dai-Tokyo Fire and Marine Insurance Co.
When the two merge as scheduled on April 1, creating the Aioi Insurance Co., Toyota will hold a controlling 33.4 percent stake in the company. Aioi is expected to be Japan's fourth-largest non-life insurance company.
Toyota said in a statement that it 'intends to establish a relationship with Aioi as an insurance company close to Toyota,' in the same way that Chiyoda was close to Toyota. About 29 percent of current Toyota owners hold car-insurance policies from Chiyoda.
Until recently, car-insurance policies were regulated heavily and thus almost identical. For example, it was only after deregulation within the last three years that companies were allowed to charge differing premiums based on a driver's age.
With little to choose from when selecting a policy, car buyers tended to go with whatever the dealer suggested. Now, however, competition is increasing, leading to mergers such as the one between Chiyoda and Dai-Tokyo.
Toyota, which is increasing its financial-services operations in Japan, aims to use its ties to Aioi as a competitive weapon in its home-market car sales.