Japan’s general insurance market has received a boost with the news that three leading insurers have finalised plans to merge.

Mitsui Sumitomo Insurance, Aioi Insurance and Nissay Dowa General Insurance will become Japan’s largest non-life insurer when they complete their merger in April next year, tipping Tokyo Marine off the top spot.

At present Mitsui Sumitomo is the second-largest insurer in the Japanese market, while Aioi is ranked fourth and Nissay Dowa sixth. They have formed a holding company, MS&AD Insurance Group Holdings, which will have premium revenue of at least ¥2.59 trillion ($33.5 billion).

Commentators and investment analysts have praised the merger plan, saying Japan’s insurers need to cut costs and improve efficiencies to counter the effects of a stagnant economy and declining demand.

Other Japanese insurers are also planning to merge. In July Sompo Japan Insurance and Nipponkoa Insurance announced a merger plan that will see them become the third-largest general insurer.