REFILE-Allianz to start selling life insurance in Japan

TOKYO, March 26 (Reuters) - Allianz (ALVG.DE: Quote, Profile, Research), Europe's biggest insurer, said it will sell variable annuities through a Japanese unit of Citigroup (C.N: Quote, Profile, Research) and may offer other products as it enters the world's second-largest life insurance market.

Hartford Financial Services Group Inc (HIG.N: Quote, Profile, Research) and others have established over several years a solid presence in variable annuities -- a hybrid of life insurance and investment trusts.

Variable annuities typically offer some guarantee to the principal and have struck a chord with Japan's growing number of retirees eager to shift some of their savings out of low-yielding deposits but worried about the risk of a pure stock or bond fund.

The market has already grown some 28-fold over the past five years to 16.5 trillion yen ($165 billion), but is still thought to have plenty of room to grow given it is just a tenth the size of the U.S. market.

"The potential is there," said Fitch Ratings Associate Director Megumi Usui, adding, however, that the entry of more Japanese insurers in addition to foreign firms such as Hartford was making the market tougher to crack.

"The market is getting quite competitive," she said.

Hartford Life held 24 percent of Japan's variable annuities market in terms of assets as of September, followed by Mitsui Sumitomo MetLife at 14 percent, ING Life at 13 percent and Tokio Marine & Nichido Financial Life at 12 percent, according to industry newspaper Hoken Mainichi Shinbun.
Allianz had said earlier this month that it would start selling variable annuities in Japan from April but had not given details such as its plans to sell the product through Nikko Cordial Securities, a broker recently acquired by Citigroup.

Allianz said it would consider additional sales partnerships while also looking at introducing other products, encouraged by deregulation last year that further eased restrictions on what insurance products could be sold through banks.

Bruce Bower, Allianz's Asia Pacific Chief Executive Officer, told Reuters in an interview that the company had not decided on its next product offering for Japan but that bundling healthcare insurance with annuities could be an option.

"Healthcare is a big industry in Japan and a growing industry in Japan. We'll explore what opportunities may arise to see whether it is viable for us to launch products in that regard," Bower said. (Editing by Louise Ireland)