NIPPON LIFE, SHEARSON TIE-UP SEEN SETTING TREND
Nippon Life Insurance Co's 538 mln dlr
purchase of a 13 pct stake in Shearson Lehman Brothers Inc
brokerage unit is a shrewd move that other Japanese insurers
are likely to follow, securities analysts said.
    The investment in one of Wall Street's top brokerage houses
is likely to pay off in dollars and international market
position, they said. "It's part of a trend towards growing
capital participation by Japanese insurance firms in foreign
financial institutions," said Simon Smithson, an analyst with
Kleinwort Benson International Inc in Tokyo.
    The investment in Shearson Lehman, a growing firm described
by some analysts as the top U.S. Retail brokerage, will give
Nippon Life a ringside seat and possibly lower commissions on
Wall Street, where it invests an increasing percentage of its
assets of 90.2 billion dlrs, they said.
    Nippon Life staff will also acquire expertise in business
sectors which have not yet opened up in Japan, they added.
    The agreement between the two companies calls for a 50-50
joint venture in London focussing on investment advisory asset
management, market research, and consulting on financing.
    Nippon Life is Japan's largest insurance company and the
world's biggest institutional investor, analysts said.
    The Japanese finance ministry is expected to approve the
deal in April, making Nippon Life the first Japanese life
insurance firm to take a stake in a U.S. Financial firm.
    The limit on foreign assets as a proportion of Japanese
insurers' assets was increased to 25 pct from 10 pct last year.
Since then, they have stepped up purchases of foreign stocks
and sought to deepen their understandng of foreign markets and
instruments.
    Last year, a Sumitomo Life Insurance Co official was
appointed to E.F. Hutton Group Inc unit E.F. Hutton and Co's
board and Sumitomo Bank Ltd spent 500 mln dlrs to become a
limited partner in Goldman, Sachs and Co.
    Smithson said Japanese banks started buying smaller and
problem-plagued banks in 1984. "But now Japanese are going for
blue-chip organisations," he said.
    "It's a reflection of what has happened in manufacturing
industries," said Brian Waterhouse at James Capel and Co. "With a
historically high yen, and historically low interest rates,
there's an increasing disincentive to invest in Japan."
    Competition in fund management has grown along with greater
Japanese savings. The typical salaried employee has 7.33 mln
yen in savings, reflecting an annual average savings rate of 17
to 18 pct, he said.
    To stay competitive, fund managers must invest overseas and
gain experience with financial instruments which are likely to
spread to Japan with further deregulation. "The high regulatory
environment has delayed (life insurance firms')
diversification. Now there's a growing number of new products
in an environment of increasing competition for performance on
fund management," Smithson said.
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