Japan’s Sompo To Acquire Endurance Holdings

October 5, 2016

[Updated] Following a report that Sompo Japan ”firmed up plans” to acquire Endurance Specialty Holdings, the Bermuda-based company issued a statement confirming they are “in advanced discussions” with the Tokyo-based global insurance carrier “regarding a potential strategic transaction.”

Nikkei Report

Nikkei Asian Review reported, “Sompo Japan Nipponkoa Insurance firmed up plans Tuesday to acquire Endurance Specialty Holdings, a business-insurance provider with a strong U.S. presence, aiming to take advantage of a stronger yen to add growth avenues amid a grim domestic outlook.

“Sompo Japan, a unit of Sompo Holdings, will purchase all of Endurance’s outstanding shares without a tender offer, a move that is legal in Bermuda, where Endurance is domiciled. The deal, seen at around $6.5 billion, will be finalized and announced as soon as Wednesday. It will likely be completed by the end of the fiscal year in March.”

Endurance Confirm “Advanced Discussions”

Following that report, Endurance issued a statement confirming “that it is in advanced discussions with Tokyo-based global insurance carrier Sompo Holdings, Inc. [TYO:8630] regarding a potential strategic transaction.

“There can be no assurance that the discussions will lead to a definitive agreement. Endurance does not intend to comment further at this stage and any further statements will be made if and when appropriate.”

Update: Endurance Confirm Sompo To Acquire For $6.3 Billion

Update Oct 5, 3.20am: Endurance has now confirmed that SOMPO Holdings and Endurance “have entered into a definitive agreement for the acquisition of 100% of the outstanding ordinary shares of Endurance by SOMPO for US$93 per share in cash.”

The company said, “The aggregate consideration is JPY 637.5 bn [approximately US$ 6, 304 m[i]], which represents approximately a 40.3% premium to Endurance’s closing share price on 3 October 2016 and approximately a 41.6% premium to the average share price over the last 3 months.

“The acquisition has been approved by the Board of Directors of Endurance and is subject to Endurance shareholder approval at a shareholders’ meeting.

“The acquisition will be effected through SOMPO’s wholly owned subsidiary, SOMPO Japan NI Inc.and will be financed with existing sources of liquidity and supplementary facilities without a financing contingency.

“The transaction is subject to the clearances and approvals of applicable regulatory authorities, as well as other customary closing conditions. It is expected that the transaction will close before the end of SOMPO’s current fiscal year end [31 March 2017].”

Kengo Sakurada, President and CEO of SOMPO Holdings, Inc, commented: “Today’s agreement marks the beginning of SOMPO’s overseas transformation which undoubtedly enhances the quality and reach of our insurance services. Endurance brings strength in the primary insurance business in developed markets.

“Endurance also brings a highly experienced executive team led by one of the world’s leading P&C CEOs in John Charman. Mr. Charman, and certain shareholders associated with Mr. Charman, representing in the aggregate approximately 4.9% of Endurance ordinary shares, have agreed to vote in favor of the proposed transaction.

“This acquisition will be integral in helping SOMPO realize its goal of providing insurance and related services of the highest quality which contribute to the security, health and wellbeing of its customers.”

John Charman, Endurance CEO, added: “Today, we have strategically aligned ourselves with SOMPO, a large, well capitalized and highly respected global insurance [and reinsurance] company headquartered in Japan. This signals the beginning of an exciting new chapter for Endurance, our wonderful and incredibly talented people and our much valued clients.

“When I joined Endurance just over three years ago, I stated quite publicly that cost efficient scale, globally diversified insurance and reinsurance products as well as market relevance were absolutely essential to our future success.

“I also signaled that I would seek out a high quality, strong Asian partner to further complement our global business capabilities for the future. Our alignment today with SOMPO achieves all those goals and promises so much more.

“Critically, both our companies share and practice important values daily – a commitment to the highest levels of loyalty, integrity and client service. These stated values are clearly reflected in our disciplined, focused underwriting approach which has deeply embedded, strong risk management practices.

“It is with great honour and with much joy that we all look forward to being welcomed as important family members of SOMPO. Finally, to our Endurance shareholders, we thank you for your loyalty and trust over the years and are happy that you have been rewarded with an attractive premium for your investment.”

The company added, “Under, and in accordance with, applicable laws and regulations in Bermuda, the acquisition will be implemented through SJNI’s special purpose company in Bermuda, Volcano International Limited and then merging it into Endurance, with Endurance as the surviving company.”

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Comments (11)

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  1. Onion Juice says:

    And Blue Collar workers havent had a raise for 5 years, but on de upside we spent $77 million on a sailboat race and we’re getting a FREE airport built for us.

    • Carnie says:

      Join the private sector then. Or are you too gutless.

      • Gargoyle Wings says:

        Oh, so there are no blue collar worker’s in the private sector?

    • serengeti says:

      Civil servants ands government workers get raises.

      $77m is a PLP myth.

      If you don’t like working for government get another job.

    • Enough says:

      What on earth does that have to do with this?? Focus more time getting that chip off your shoulder than on matters you have no understanding of.

    • Gabriel says:

      Oh dear, another case of itdoesntbenefitmeitis.

    • You Do You says:

      What does blue collar have to do with this? This is great news for employees at Endurance in BDA. Stock jumped huge yesterday and there will likely be little if any job loss.

      But yeah, make it about something else.

    • Rada Gast says:

      And this year’s Oscar for non sequitur goes to ….*opens envelope*….

  2. International Business says:

    Time will tell if there is ‘little if any job loss’. Cost efficiencies are one of the stated goals of the transaction after all.

    • Noncents says:

      @ International Business

      Whilst you are correct about cost efficiency, the Bermuda operation will have little overlap with the existing Sompo business so layoffs are pretty unlikely. Not to say it’s impossible, but as far as M&A goes, this is a great outcome for the Bermudian staff.

  3. Frank says:

    I wish i had some of that stock a week ago!