(Bloomberg) -- Japanese insurers made more than $18 billionworth of acquisitions in the U.S. last year, and their spendingspree isn’t over yet, industry dealmakers said Tuesday.

Japan has a number of large, healthy insurers facing dim growthprospects at home, a panel of investment bankers said during amergers and acquisitions conference in New York hosted by law firmMayer Brown. The country’s aging population, devalued currency andlow rates pressuring returns are all stunting domestic development,they said.

These dynamics have spurred a wave of Japan-to-U.S. insurancedealmaking that’s yet to crest, they said.

The U.S. is “the biggest place to go shopping,” Meir Lewis,managing director in Morgan Stanley’s insurance investment bankinggroup, said during a panel discussion. “I expect that to continuebecause these issues are continuing.”

New rules chill reinsurer, P&C deals

Japanese buyers’ willingness to keep striking deals in the U.S.should help buoy an otherwise slow market for U.S. insurancedealmaking in 2016, panelists said. New rules aimed at curbingso-called inversion deals have put a chill on cross-border dealsinvolving reinsurers and, to someextent, property and casualtyinsurers.

U.S. life insurers, meanwhile, have become skittish aboutpairing up in light of stiffer oversight of so-called systemicallyimportant non-banks, such as Prudential Financial Inc.

“The midsize companies that could merge among themselves arehesitant to do so,” said Nandini Mongia, managing director withDeutsche Bank AG. “The greater the size of the transaction,the greater the scrutiny.”

The Japanese foray into the U.S. has been led by four companiesthat together struck $18.4 billion in deals last year, according todata compiled by Bloomberg: Tokio Marine Holdings Inc., MeijiYasuda Life Insurance Co., Sumitomo Life Insurance Co., andDai-Ichi Life Insurance Co.

Other Japanese insurers are likely to follow their lead andenter the U.S., while those that already have a presence will lookto bulk up through additional deals, said Gautam Chawla, managingdirector and co-head of the global insurance group at CitigroupInc.

He noted that Dai-Ichi bought Genworth Financial’s life andannuity business last year, less than a year after acquiringProtective Life Corp. for $5.5 billion.

“This is just step one of what can can be step two and beyond,”Chawla said.

High prices

Japanese acquirers have been looking to buy high-quality companiesrun by competent managers that can oversee expansion into the U.S.,Morgan Stanley’s Lewis said. They have also shown that they arewilling to pay high prices to close a deal, he said.

Tokio Marine paid a premium of more than 30% to acquire HCCInsurance Holdings Inc. in a deal worth close to $7.5 billion thatclosed in October.

Nippon Life Insurance Co. and Sompo Japan Nipponkoa HoldingsInc. are among Japanese insurers that may look for targets in theU.S. to boost profits, according to Bloomberg Intelligence analystSteven Lam. MS&AD Insurance Group Holdings Inc. PresidentYasuyoshi Karasawa has also expressed interest in U.S. M&A.

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