Japanese insurers made more than $18 billion worth of acquisitions in the U.S. last year, and their spending spree isn’t over yet, industry dealmakers said on Tuesday.

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

These dynamics have spurred a wave of Japan-to-U.S. insurance dealmaking 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 banking group, said during a panel discussion. “I expect that to continue because these issues are continuing.”

Placid Market

Japanese buyers’ willingness to keep striking deals in the U.S. should help buoy an otherwise slow market for U.S. insurance dealmaking in 2016, panelists said. New rules aimed at curbing so-called inversion deals have put a chill on cross-border deals involving reinsurers and, to some extent, property and casualty insurers.

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

“The midsize companies that could merge among themselves are hesitant to do so,” said Nandini Mongia, managing director with Deutsche 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 companies that together struck $18.4 billion in deals last year, according to data compiled by Bloomberg: Tokio Marine Holdings Inc., Meiji Yasuda Life Insurance Co., Sumitomo Life Insurance Co., and Dai-Ichi Life Insurance Co.

Other Japanese insurers are likely to follow their lead and enter the U.S., while those that already have a presence will look to bulk up through additional deals, said Gautam Chawla, managing director and co-head of the global insurance group at Citigroup Inc.

He noted that Dai-Ichi bought Genworth Financial’s life and annuity business last year, less than a year after acquiring Protective 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 companies run by competent managers that can oversee expansion into the U.S., Morgan Stanley’s Lewis said. They have also shown that they are willing to pay high prices to close a deal, he said.

Tokio Marine paid a premium of more than 30 percent to acquire HCC Insurance Holdings Inc. in a deal worth close to $7.5 billion that closed in October.

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

Topics Trends Mergers & Acquisitions USA Market Japan