Nippon Life Insurance said that it will invest EUR500m in a unit of German insurance group Allianz.

The Japanese insurer said the investment will be made by purchasing 30-year convertible subordinated notes issued by Allianz Financial II, a finance subsidiary wholly owned by Allianz.

Reportedly, the move is aimed at extending its global reach due to limited growth prospects in local market.

German insurer said within 10 years after issuance and under certain conditions the notes can automatically convert into Allianz common stock.

In addition, Nippon Life has the option to exchange the notes for common stock issued by Allianz within 10 years after issuance.

The transaction is expected to close on 7 July 2011.

Nippon Life provides a broad array of products including whole life, medical, nursing coverage and annuities in Japan.

Nippon Life Insurance president Yoshinobu Tsutsui said the objective of this investment is to establish a long-term partnership that is mutually beneficial for both companies.