5-12, Imabashi 3-chome
Nippon Life Insurance Company is the world's largest life insurance company in terms of insurance-in-force, premium income, and total assets, and one of Japan's most influential financial institutions. Nippon Life is the biggest shareholder on the Tokyo Stock Exchange, owning approximately 3% of the market's total shares. With rare exceptions, Nippon Life is a conservative investor, with a diversified portfolio that demonstrates preference for steady, long-term returns over high-risk, high-yield instruments. The company has grown to gigantic proportions, and it continues to grow despite periods of instability in the domestic and international economies and some dramatic losses during the 1980s. Although not an innovative company, Nippon Life has a remarkable number of firsts to its credit, beginning in 1889, when the company originated the policies that helped make it the first major life insurance company in Japan.
In 1947 Nippon Life also became the first of Japan's life insurance companies to reorganize itself as a mutual life insurance company. In 1959 the company originated made-to-order insurance, combining payment on maturity and payment on the death of the policyholder--a product innovation that dominated the market for more than a decade. The 1970s saw a flurry of Nippon Life product innovations. The company had pursued a vigorous program of overseas investment since about 1915, but in 1981 it achieved another first when it established the industry's first overseas real estate subsidiary. That same year, Nippon Life became the first Japanese life insurance company to acquire real estate in the United States--a 50% interest in a New York City office building.
Although as an industry front-runner Nippon Life far outdistances its competition, the company also places a high priority on its close relationships with other companies, both in Japan and overseas. As an underwriter and purveyor of financial services as well as an investor, Nippon Life is committed to globalization. Despite some necessary retrenchment of foreign investment to cope with market conditions, President Josei Itoh has emphasized globalization.
Close relationships among influential financial institutions in the busy mercantile center of Osaka in the late 1880s created the opportunity for Sukesaburo Hirose to found Nippon Life. In the three decades that had passed since Japan's dramatic opening to Western commerce and culture, the centers of trade had begun to reflect a new receptivity on the part of consumers to concepts that were well established overseas. The idea of providing personal financial protection for future exigencies was not entirely foreign, but for centuries it had taken the form of mutual-aid societies centered within religious communities.
Hirose, a banker from Shiga Prefecture, sensed that a secular form of financial protection would be readily accepted in a busy urban center such as the Kansai region. He consulted bank executives in Osaka about starting a company. The ten biggest banks there had formed a powerful bankers' association, which, with the new Meiji government's help and encouragement, eventually controlled the supply of money in Osaka. These bankers helped Hirose cope with such problems as opposition from rival business factions, and on July 4, 1889, Nippon Life began operations in Osaka as a limited company.
Public acceptance came quickly. As residents of an island nation with limited resources, the Japanese felt personally vulnerable, and opportunities to gain protection from future adversities have generally been welcomed--for example, Japan has usually had one of the highest ratios of savings to income. This factor--along with a need to trust one another as members of close-knit, interdependent communities--has conditioned Japanese consumers to buy a large amount of insurance.
By April 1890 Hirose opened Nippon Life's first branch office--a storefront in Tokyo. Three years later, visitors to the World Columbian Exposition in Chicago could witness Hirose's rapid outreach to the overseas market: Nippon Life's collection of annual reports and bilingual versions of its prospectus. The company was neither tapping overseas markets nor investing in them yet, but it did gain visibility as a basis for future outreach to foreign markets.
The next branch office to be opened--in Kyushu in 1895--reflected the company's growing prosperity. It was a spacious, free-standing building. Before the turn of the century, Nippon Life was Japan's top purveyor of life insurance based on insurance-in-force figures. The company became an important lender to local merchants. Rapid growth continued through the first decade of the 20th century, and accelerated as Japan entered the political arena of world powers as a World War I Allied power. By 1916 Nippon Life was investing in British, French, and Russian bond issues.
In the early 1920s growth slowed with the pace of the post-World War I economy and as a result of the widespread destruction of the Great Kanto Earthquake in 1923. The following year, the company established the Nippon Life Lifesaving Society, described in company's literature as "a major step forward" because it directly supported health-care services.
Intensive direct marketing helped turn Nippon Life's growth curve upward by the end of the decade, and the company regained its leadership position in contracts issued. Team spirit among personnel was cultivated formally through sales training and informally through company-sponsored athletics. At one such session in 1933, management made the prophetic announcement: "Nippon Life aims to be number one in the world."
As preparations for war went forward in the 1930s, Nippon Life developed one of its innovations: a new type of insurance based on the contribution method, allocation of profits that has since become the basis of most Japanese-issued insurance. The new insurance went on the market in 1940, and Nippon Life insurance-in-force contract values soared to approximately 20% of the nation's total.
Destruction and defeat in World War II brought Nippon Life's progress to a standstill. In 1947, under General Douglas MacArthur's forces Nippon Life took its first steps toward recovery when the company reorganized itself as a mutual life insurance company. Again under strict control by a government encouraging its growth, the company began to cope with problems such as forfeiture of overseas holdings and inflation that not only devalued insurance contracts but also slowed development of new business. By 1949, however, Nippon Life had recovered sufficiently to start a new community service: a "mobile angels clinic"--a van carrying medical services to underserved areas. By 1950 some businesses were already beginning to prosper and income was on the rise.
The company introduced another product in the 1950s that immediately became popular: monthly-installment-based insurance. At the same time, women began to figure prominently among the company's representatives, who fanned out on door-to-door sales sweeps each morning after a brief pep rally. In 1953 women sales representatives numbered 2,000. By 1990 there were more than 80,000--constituting some 95% of Nippon Life's workforce.
Nippon Life introduced the first made-to-order insurance with a term rider, combining payment on maturity and payment on the policyholder's death, in 1959. It became a leading product throughout the following decade and well into the 1970s. The company introduced a large-scale IBM computer system in 1962 to automate its burgeoning sales and investment records.
The 1960s were marked by further expansion into many areas of business and community service--corporate welfare and pension plans, for example. With the increased variety of company activity came increased emphasis on training, and in 1961 the company built a special training facility at Nakanoshima. In 1963 the company opened its Nissay Musical Theatre in Tokyo. As the nation's economy boomed, raising profits and personal incomes, the traditions of saving and investing in insurance and other financial products remained strong, supporting further company growth.
In the 1970s some government restrictions were lifted, which made it possible for Nippon Life to develop and introduce a new range of insurance-related products. Individual term insurance and annuity plans and life insurance related to asset formation are products that continue to be popular. The company also diversified its investment portfolio, adding consumer loans, real estate, bonds, and other equities. As deregulation spread from the Western economies, Nippon Life had new opportunities for risk-taking.
With the first purchase of real estate interests in the United States in 1981, Nippon Life acquired more of the type of investment the company has traditionally favored: long-term income properties. Not all these investments have been successful from the start, however. For example, among the large office towers the company purchased in major U.S. cities is a $200 million building in Dallas, Texas, that has been slow to lease.
The stock market crash in the late 1980s provided some sobering experiences. Nippon Life's strong asset base, however, made such events affordable as learning experiences. For example, seven months after paying $508 million for 13% share in Shearson Lehman Brothers in 1987, the value of Nippon Life's stake in the company had dwindled to about $225 million. Shearson's majority owner, American Express, began to offer American Express cards through Nippon Life's salespeople. Knowing how to benefit from close ties with other businesses continues to be a key factor in Nippon Life's success.
Despite some liberalization, the life insurance business in Japan is still under strict, but favorable, government control. Nippon Life dwarfs its competitors in sheer asset size, as well as in the number and value of contracts. Among the company's greatest assets may be a good sense of timing and the patience to get to know a market thoroughly before entering it. Because Nippon Life does not rush into a market without thorough research, the company does not plan to compete for life insurance sales in the United States. Although the company's investment capital overflowed domestic opportunities as the 1990s began, market reverses triggered a quick hold on investment in the United States, Europe, and Southeast Asia during the late 1980s, until signals of a stable recovery could be detected. Nippon Life's management has made it clear that prompt expansion will come when the conditions are right--notably into the European Economic Community and Southeast Asia.
Principal Subsidiaries: Nissay Computer Co., Ltd.; Nippon Insurance Service Co., Ltd.; Osaka Agency of Nippon Life Insurance Co., Ltd.; Tokyo Agency of Nippon Life Insurance Co., Ltd.; NLI Insurance Agency Inc. (U.S.A.); Nissay Investment Co., Ltd.; Nissay Mortgage Co., Ltd.; Nissay BOT Capital Management Corporation; Nissay Card Service Co., Ltd; Nissay Leasing Co., Ltd.; Seiwa Credit Co., Ltd.; Nissay Trading Co., Ltd.; Daiichi Mutual Fire & Marine Insurance Co., Ltd.; Akita Atorion Building Co., Ltd.; Shinjuku NS Building Co., Ltd.; Tsudanuma Building Maintenance Service Co., Ltd.; Ohmiyua Sonic City Co., Ltd.; Nissay Okinawa Kogyo Co., Ltd.; Seiwa Kaikan Co., Ltd.; Nangoku Nissay Building Co., Ltd.; NLI International Investment Luxembourg S.A.; NLI Asset Management Corporation (U.S.A.); NLI International Inc. (U.S.A.); NLI International Limited (U.K.); NLI International Canada Inc.; NLI International Singapore Pte. Ltd.; PanAgora Asset Management Ltd. (U.K.); NLI International Australia Limited; Nissay Business Service Co., Ltd.; Nippon Life Lifesaving Society; Nippon Life Health Consultant; Nissay Athletics Co., Ltd.; NLI Properties, Inc. (U.S.A.); NLI Properties Canada Inc.; NLI Properties UK Limited; Seiwa Real Estate Co., Ltd.; Nishiyamato Development Co., Ltd.; Seiko Building Maintenance Service Co., Ltd.; Taisei Building Maintenance Service Co., Ltd.; Nissay Stadium Co., Ltd.
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