MITSUI MARINE AND FIRE INSURANCE COMPANY, LIMITED History

Address:

3-9, Kanda-surugadai
Chiyoda-ku,
Tokyo
101-11
Japan

Telephone: (03) 3259-3111
Fax: (03) 3291-5466

Public Company
Incorporated: 1918 as Taisho Marine and Fire Insurance Company, Limited
Employees: 7,643
Assets: ¥3.67 trillion (US$25.53 billion)
Stock Index: Tokyo Osaka Nagoya Luxembourg Paris

Company History:

Mitsui Marine and Fire Insurance Company is the third-largest non-life insurance company in Japan. With about 46,000 agencies in operation, Mitsui offers domestic customers a full range of auto, fire, personal accident, and liability insurance. Mitsui's roots lie in the shipping business of its former parent, Mitsui Bussan. The company has developed an extensive network of overseas subsidiaries and liaison offices on all six inhabited continents, and, with the 1988 creation of its first U.S. subsidiary, Mitsui has set its sights on a bigger piece of the vast but highly competitive U.S. market.

Mitsui was founded as Taisho Marine and Fire Insurance Company in October 1918 by the powerful Mitsui zaibatsu, or trading group. World War I had prompted an enormous increase in Japanese shipping and shipbuilding, as Japan hurried to fill orders previously handled by the war-depleted Western powers. As one of Japan's leading shipowners, and a force in nearly every sector of Japanese trade, Mitsui Bussan rapidly expanded its cargo business under the favorable market conditions--by war's end controlling about 40% of Japan's three-million-ton merchant fleet. It also opened its first shipyard, in Okayama Prefecture, a forerunner of the Mitsui Shipbuilding and Engineering Company. To protect its growing fleet of ships--and the cargo it carried--Mitsui used a part of its large war revenues to establish its own insurance company, Taisho Marine and Fire Insurance Company. The new venture was in operation by the end of 1918, processing orders from Mitsui's numerous sales representatives around the world.

Although chartered as an independent company, Taisho remained very firmly in the Mitsui family of concerns. It insured Mitsui ships, land, and property at favorable rates and, by competing with Mitsubishi's Tokio Marine and Fire Insurance Company, provided its parent with an additional weapon in the continuing struggle against its chief rival. In addition, as the new venture gained capital, it would be expected to serve as a source of investment funds for future Mitsui expansion, thus joining the Mitsui Bank in forming the financial backbone of Mitsui's extremely complex commercial empire.

Before this plan was well under way, however, a nationwide disaster nearly brought Taisho to an early end. On September 1, 1923, a devastating earthquake struck Tokyo and Yokahama, destroying thousands of delicately built Japanese homes and buildings, setting fire to many square miles of city property, and creating local tidal waves that washed away coastal villages. As one of Japan's few property and casualty insurers, Taisho faced claims many times greater than its total assets. It was estimated that over 100,000 people died and half a million homes were destroyed by the earthquake, prompting the Japanese government to absolve the insurance companies of all but 10% of their liabilities. Even so, the government was forced to loan Taisho and the other insurers sufficient funds to cover the payments, saddling the new company with a debt so large it remained on the books until 1949.

Having survived a great challenge, Taisho--not yet five years old--steadied itself, and was soon prospering in the 1920s. By 1924, the company had already opened its first overseas office, in London, as Mitsui's extensive international interests made foreign expansion all but inevitable for Taisho. The 1920s were rich years for the Mitsui group, which by decade's end had acquired a controlling interest in no fewer than 130 companies. As the zaibatsu's chief insurer, Taisho enjoyed a similar surge, until the Great Depression brought the business world to a temporary standstill.

The 1930s were a period of difficult progress for Taisho. Its underwriting business continued to expand along with the Mitsui interests, but Mitsui and its affiliates increasingly suffered from the hostility and open violence of Japan's right-wing, ultranationalist groups. With the 1932 assassination of Takuma Dan--Mitsui's obanto, or top manager--the rightists assumed a position of growing power and led Japan ever closer to war with China. As armament became increasingly important to the Japanese economy, Taisho's property and casualty policies became a matter of grave concern. As the 1923 earthquake had made clear, a national calamity such as war was could destroy the Japanese insurance industry.

Even Taisho's great concern proved to be a gross underestimation of the war's effect. By 1945 the combined efforts of Allied submarines and bombers had devastated essentially all of Japan's merchant fleet and a great proportion of its industrial base. In the universal chaos, insurance claims had little meaning--the nation as a whole would have to be rebuilt, insurers and insured alike. Taisho and the Mitsui zaibatsu had no sooner begun this process, however, than General Douglas MacArthur and the Allied occupation forces took steps to dismantle Mitsui and the other zaibatsu, which were perceived as inherently anticompetitive. The Mitsui empire was split into hundreds of small companies, and Taisho was forced to survive in a far more competitive economy.

By the early 1950s the postwar Japanese economy had already made remarkable progress, and nowhere more so than in shipping and shipbuilding. Always a key industry for insular Japan, shipping rebounded with astonishing speed, and by 1956 Japan had become the number-one shipbuilder in the world. Such success meant a similar boom for Taisho's hull and cargo insurance division, which in turn solidified the company's asset base and helped secure its fire and casualty business. An additional factor in Taisho's postwar recovery was the growing number of automobiles in Japan. With every year of continued prosperity, the number of Japanese who owned automobiles increased dramatically, helping auto insurance eventually to become Taisho's leading division.

In 1955 Taisho resumed its overseas expansion with the opening of a liaison office in New York, followed rapidly by offices in Hong Kong, San Francisco, and Bangkok. In the meantime, Mitsui Bussan, the zaibatsu's trading company, had slowly regrouped, and in 1959 was officially reborn as the New Mitsui Bussan. As in the prewar era, Taisho once again closely allied itself with the resurgent Mitsui group, buying the third-largest number of shares in New Bussan and becoming an important member of the group's recently resurrected monthly meetings. The new Mitsui group was not as tightly integrated as the zaibatsu had been, with less-extensive cross-holdings of stock and, in particular, no single, family-owned holding company in charge of the various affiliates; yet Taisho's role in the group remained substantially as it had always been, providing both insurance and financing for the other group members when they embarked on new ventures.

In the 1960s Japan emerged as a world economic power. For Taisho, the combination of shipping supremacy and a growing domestic population of automobile owners led to continued profitability and expansion. Overseas, the firm pushed particularly hard in the South Pacific, where new offices in Australia, New Zealand, Malaysia, and Indonesia solidified its already strong presence. In 1970 Taisho's three main divisions--auto, fire and comprehensive, and marine and aviation insurance--produced premium revenues of ¥43.6 billion; a decided increase over the ¥27.1 billion registered by Taisho a mere two years previous, and another indication of the Japanese economy's fervid growth.

Taisho and the Japanese shipping business suffered a permanent setback in 1974 and 1975, when the Organization of Petroleum Exporting Countries (OPEC) oil embargo brought to a close the great age of Japan's shipbuilding industry. The enormous oil tankers manufactured and insured by the Japanese were no longer needed as the world cut down on oil imports; as a result, the share of Taisho's revenue generated by shipping began to decrease steadily. As high as 25% in 1970, the proportion stood at less than 9% in 1989. Taisho more than compensated for the difference, increasing every other aspect of its business--especially automobiles, which are now subject to compulsory liability coverage in Japan. By 1978, premium income totaled nearly ¥280 billion, a sevenfold increase over the figure for 1970.

In 1989 Taisho's premiums nosed over ¥400 billion, and the company had spread its affiliated offices over much of the globe. As a world power in the insurance industry, Taisho formed many international joint ventures, including a 1981 deal with Aetna Life and Casualty Company and Italy's Assicurazioni Generale; a United Kingdom deal with the Sun Alliance Group; and a Saudi Arabian initiative called the Arab Japanese Insurance Company.

In June 1990 Taisho president Ko Matsudata announced that, effective April 1, 1991, Taisho Marine and Fire Insurance Company would change its name to Mitsui Marine and Fire Insurance Company. This move illustrated the general resurgence the former zaibatsu--now known as the less-formally aligned kieretsu--enjoyed during the 1980s and into the 1990s. Having survived the catastrophe of war and the lesser problem of Japan's declining shipping revenue, Mitsui remains a consistently profitable concern.

Principal Subsidiaries: Taisho Marine & Fire Insurance Co. Ltd.; P. T. Assuransi Insindo Taisho (Indonesia); Metro-Taisho Insurance Corp. (Philippines); Taisho Marine and Fire Insurance (Malaysia) Sdn. Bhd.; Taisho Monarch Insurance Co., Ltd. (Kenya); Hong Kong and Orient General Insurance Co. Ltd. (Hong Kong); Arab Japanese Insurance Co., Ltd. E.C. (Bahrain); Fire, Equity & General Insurance Co., Ltd. (Nigeria); Taisho Investment (Luxembourg) S.A.; Taisho Realty Corp (U.S.A.); Taisho Investment (Bahamas) Ltd.; Taisho Marine & Fire Insurance Co. (U.S.A.); Taisho Finance International Ltd. (U.K.); Taisho Investment (Jersey) Ltd. (U.K.); Taisho Claims Service Corp. (U.S.A.).

MITSUI MARINE AND FIRE INSURANCE COMPANY, LIMITED History

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