Japan’s MS&AD will merge its Mitsui Sumitomo and Aioi Nissay Dowa insurance businesses to create a company with the biggest share of the country’s non-life market.

Moody’s Ratings VP and senior credit officer Soichiro Makimoto says the businesses have collaborated under the same holding company for 15 years and integration has taken place in capital and enterprise risk management, and business strategies.

“The merger will therefore have no significant direct impact on their credit, but we expect it will further advance integration,” he said. “For example, there is room for further cost reduction through deeper integration of their IT systems, which would improve profitability.”

Mitsui Sumitomo Insurance handles most overseas business and there is “little cannibalisation” except in domestic property and casualty, where the pair operate similarly but have somewhat different customer bases, Mr Makimoto says.

MS&AD says the merger will combine the strengths of both businesses in the domestic market and it is committed to “strengthening efforts to meet customer trust and expectations while consistently securing profits commensurate with the size of the top line.

“Furthermore, we aim to establish a system to offer the best products and services to customers by investing accumulated capital into growth areas such as international business, domestic life insurance business and digital/risk-related services.”

Further details, including the post-merger name, will follow.