Bermuda-based RenaissanceRe Holdings has agreed to pay about $1.5 billion to acquire Tokio Marine’s reinsurance platform (TMR), which includes Tokio Millennium Re AG and Tokio Millennium Re (UK).
If closing tangible book value is unchanged from June 30, 2018, Tokio Marine would receive approximately $1.5 billion in cash and RenaissanceRe common shares.
At the same time, the State Farm Securities Insurance Company, which has current investments for two RenaissanceRe subsidiaries, has agreed to invest $ 250 million in RenaissanceRe. Following the completion of the investment, the State Farm will have approximately 4.8 percent of the total common shares of the Renaissance, reflecting a broader relationship with the Renaissance, which includes the investments of the State Farm, the Top-tier Reinsurance and DaVinciRe Holdings of the vehicles managed by RenaissanceRe.
Also, as part of the transaction, Tokio Marine has agreed to provide the Renaissance with a $ 500 million negative development guarantee to protect the specified reserves of the TMR, including the provision for unearned premiums. In addition, Tokio Marine and RenaissanceRe will develop business relations and sign a business co-operation agreement that will facilitate collaboration in a part of Tokio Marine and its subsidiaries’ international reinsurance purchases.
Renaissance said the transaction expects to take the book value immediately per share, value per share, business earnings per share, business earnings per share, and business return on equity.
Kevin O derinDonnell, president and CEO of RenaissanceRe, said the deal would boost the company’s scale, expand access and provide a deeper customer base. O .Donnell thanked the State Farm for agreeing to expand its relationship with RenaissanceRe.
. We see this as an opportunity to strengthen our long-term relationship with RenaissanceRe, gör State Farmer Vice President Paul Smith said in a statement.
Tsuyoshi Nagano, President and Group CEO of Tokio Marine Holdings, said that the sale of TMR will be available for sale with Toko Marine Group’s ano focus on primary insurance companies while strengthening their relations,.
Operasyon By disposing of the reinsurance activities of the TMR and TMR (CB), the Group will reduce volatility in its results and at the same time unlock the capital obtained to support these operations. Nagano said our strategic focus will continue to be the primary insurance business in developing countries as well as in developed countries.
Stephan Ruoff, CEO of TMR, said: CEO We believe that these new opportunities are being opened while integrating the TMR into a much larger global reinsurance organization that is ready to meet the challenges of a dynamic reinsurance market. TMR will continue to fulfill its commitments with Tokio Marine support until the transaction is officially closed. “
The agreement was approved by the boards of both companies and is expected to close in the first half of 2019. No need for shareholder approval.
The procurement announcement takes place after a call by the corporate investors of a Renaissance to investigate strategic options, including the possible sale of the company, less than two months ago. On September 7, Ian Anthony Rosenthal and Seth Bienstock, partners in Timeshare Capital Management, a RenaissanceRe investor since 2008, spoke to RenaissanceRe CEO Kevin ORDonnell to discover other strategic options. They suggested that the company did not lead its position as an independent reinsurer to create any value for shareholders, largely because of the easing of prices. Noting the growing consolidation of the sector, TimesSquare asked the Renaissance Board to consider strategic alternatives, including a possible sale, to raise shareholder value.
The Times Square letter drew a non-commitment response from the RenaissanceRe management.
In 2000, Tokio Marine Group established TMR as a subsidiary for overseas reinsurance risks. Since then, the insurer has said that TMR and TMR (UK) have contributed to their profits. However, TMT’s total profit contribution in the ongoing soft market in the global reinsurance market has declined from about 50 percent to less than 10 percent over a decade.
According to TMR’s 2017 annual report, last year’s natural and human catastrophic losses resulted in $ 158.9 million, the biggest decline in TMR’s history. RenRe was also affected by record-breaking insurance disaster losses for last year’s industry and recorded a net loss of $ 244.8 million for the year.
According to an analysis by Carrier Management, $ 1.9 billion of property-cat premiums represented 39.5 percent of RenRe’s total $ 2.8 billion in premiums last year and more than one-third of the total reinsurance book. For the TMR, real estate-cat premiums of $ 390 million represent 24.3 percent of the total $ 1.6 million in premiums and some over 60 percent of the total TMR property reinsurance book.
About two-thirds of TMR’s business – $ 1.6 billion, $ 1.1 billion in total – comes from North America. In RenRe, the business world in North America was about one-third of the 2017 real estate book and 20 per cent of the casualty and expertise segment.
Today, Tokio Marine is comprised of 245 subsidiaries and 32 subsidiaries worldwide. Tokio Marine’s non-life domestic businesses include Nichido Fire, Nishin Fire, E.design and Millea SAST. Starting in 2007, the insurance company began to make significant achievements such as Kiln Group, Philadelphia Insurance, Delphi Financial, HCC, Seguradora and Mellennium Re and created a diversified global portfolio primarily focused on private insurance classes.
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