Tokio Marine’s Sale of Reinsurance Units to Boost Operational Efficiency: Fitch


Tokio Marine Holdings Inc.’s (TMHD) sale of two European reinsurance subsidiaries is likely to streamline its holdings and boost operational efficiency in the group’s underwriting businesses, Fitch Ratings said.

RenaissanceRe Holdings is buying Tokio Millennium Re AG (TMR) and Tokio Millennium Re (UK) Ltd., both owned by Tokio Marine & Nichido Fire Insurance Co. Ltd., a core subsidiary of TMHD.
RenaissanceRe will pay Fitch $ 1.0 billion worth of TMM and TMR (UK) for the amount of 1.02x. TMHD will receive $ 1.22 billion in cash and $ 250 million in RenaissanceRe in common. The transaction is expected to close in the first six months of 2019 after obtaining legal approvals in various jurisdictions, such as Switzerland and the United Kingdom.

“Fitch believes that it is not really meaningful for the Tokio Marine group to maintain a large scale reinsurance business on the basis of financial losses resulting from serious catastrophes in the future due to continued weakness in reinsurance premiums,” he said. rating agency.

Moreover, the sale of the reinsurance business of TMHD follows the strategy of the company focusing on primary insurance, its strategy of is more profitable and less catastrophic risks such as private insurance in developed countries and emerging markets Dah.

Fitch noted that TMHD has been developing a high-quality primary insurance company franchise, especially in the United States – outside Japan, and as a result, the group’s contribution from international operations has fallen below 10 percent. About 50 percent of the time. “

The agreement will reduce the total risk of TMHD, including catastrophic risks, based on the available capital.

Iyor It will also allow TMHD to focus on a more stable and more profitable primary insurance business, particularly a private insurance that requires high-quality subtitle expertise, sigort he said, expecting that TMHD’s earnings will be less volatile after the deal.

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