Mitsui Sumitomo Insurance Company (MSI) is acquiring Singapore’s First Capital Insurance for $1.6 billion from Canada’s Fairfax Financial Holdings, in the biggest takeover by a Japanese insurer in populous Southeast Asia – a key target region for global players.

Starved of growth in their aging home market, Japanese insurance firms have been aggressively expanding globally. In the last two years, the insurers have struck multibillion dollar deals, especially in the United States.

In a statement on Thursday, MSI, the core firm of MS&AD Insurance Group Holdings, said it is paying 3.3 times book value for First Capital, Singapore’s largest property and casualty insurer. That compares with property and casualty insurance companies globally listed under the Thomson Reuters classification trading at an average 1.65 times book.

“A review of key recent M&A deals suggests that Japanese insurers tend to invest in highly rated, niche companies that command leading positions in mature markets,” said Soichiro Makimoto, senior analyst from the financial institutions group at Moody’s Japan K.K.

The deal will help MSI, which operates in all 10 markets of the Association of Southeast Asian Nations, cement its position as the region’s biggest player.

MSI said it expects new business opportunities in the local corporate and retail market in Singapore as well as other Asian countries after the integration.

Japan’s cashed-up insurers have been paying top dollar as they seek to spur growth and overcome negative interest rates and fewer lucrative investment options.

Patrick Hanna, EY’s ASEAN financial services transactions leader said the region offered opportunities due to very low penetration rates and favorable demographic factors. Among the unique features of the region’s markets was “profitable growth as compared to most other Asian markets,” Hanna said.

First Capital, which too has a regional presence, writes both personal and commercial lines of insurance across various classes such as property, fire, marine hull, motor and personal accident. It has maintained high profitability with a five-year average combined ratio of 76 percent, MSI said.

One source familiar with the matter said MSI was quick to pounce on the deal and get into advanced discussions with Fairfax after the Canadian group began to sound out parties keen to buy First Capital.

Sam Kok Weng, financial services leader at PwC Singapore said interest in Southeast Asia’s insurance sector was high, with large global firms, including those from Europe, United States, China and South Korea emerging as strategic buyers.

MSI and Fairfax will also explore a broad global partnership in various areas, including reinsurance relationships, both companies said separately.

Fairfax said the all-cash purchase will result in a realized net investment gain of approximately $900 million after tax. The deal is subject to regulatory approvals and is expected to close in late 2017 or early next year.

Citigroup advised MSI on the deal while Bank of America Merrill Lynch was the financial adviser to Fairfax. (Additional reporting by Kanishka Singh in BENGALURU.)