RenaissanceRe To Acquire Tokio Millennium Re

October 30, 2018

Bermuda-based RenaissanceRe Holdings announced that it has entered into a definitive agreement with Tokio Marine Holdings, Inc. pursuant to which an affiliate of RenaissanceRe will acquire Tokio Marine’s reinsurance platform, which includes Tokio Millennium Re AG and Tokio Millennium Re [UK] Limited [collectively “TMR”].

“Under the terms of the transaction, Tokio Marine will receive 1.02x the tangible book value of TMR delivered to RenaissanceRe at closing. If closing tangible book value is unchanged from June 30, 2018, Tokio Marine would receive approximately $1.5 billion in total consideration, consisting of cash and RenaissanceRe common shares,” the company said.

“RenaissanceRe expects that upon closing the transaction will be immediately accretive to book value per share, tangible book value per share, operating earnings per share and operating return on equity.

“The agreement has been unanimously approved by the Boards of Directors of both companies. The transaction is expected to close in the first half of 2019 and is subject to customary closing conditions and regulatory approvals. No shareholder approval is required.

“Under the terms of the agreement, if closing tangible book value is unchanged from June 30, 2018, the transaction consideration would consist of approximately $1.22 billion of cash and $250 million of RenaissanceRe common shares.

“The shares received by Tokio Marine will be valued at today’s closing price of $128.37 per common share, subject to adjustment at closing and a one-year holding period commencing at closing. The cash consideration will be funded through RenaissanceRe available funds and a potential pre-closing dividend from TMR, subject to regulatory approval.

“In connection with the transaction, Tokio Marine has agreed to provide RenaissanceRe a $500 million adverse development cover that will protect TMR’s stated reserves at closing, including unearned premium reserves.

“In addition, Tokio Marine and RenaissanceRe will enter a business cooperation agreement, which will enhance their business relationship and facilitate cooperation on a portion of the international reinsurance purchases of Tokio Marine and its affiliates.

“In addition, State Farm Mutual Automobile Insurance Company has agreed to invest $250 million in RenaissanceRe through its purchase of RenaissanceRe’s common shares in a private placement, following termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The shares purchased by State Farm will be valued at today’s closing price of $128.37 per common share.

“Following the completion of its investment, State Farm will own approximately 4.8% of RenaissanceRe’s total common shares outstanding, reflecting a broader relationship with RenaissanceRe that includes State Farm’s investments in RenaissanceRe-managed vehicles Top Layer Reinsurance Ltd. and DaVinciRe Holdings Ltd.

Kevin O’Donnell, President and CEO of RenaissanceRe commented: “We are very pleased to have entered into a definitive agreement to acquire Tokio Millennium Re from Tokio Marine. This transaction will increase our scale, broaden our reach and extend our ability to apply our core strengths to a deeper customer base.

“Our unique ability to capitalize on large, one-of-a-kind opportunities underscores our global reinsurance leadership, including in Casualty and Specialty lines, and our ability to execute on our successful, highly differentiated strategy.”

Mr. O’Donnell added: “We are also honored that State Farm has agreed to broaden its relationship with RenaissanceRe by investing in our common shares and extending a long-standing partnership between our two firms.

“Our acquisition of TMR and State Farm’s investment further enhance the relationship between our respective companies, which I am confident will prove equally beneficial to our shareholders. After these transactions close, we anticipate that we will continue to have the very strong capital and liquidity position you have come to expect from RenaissanceRe.”

State Farm Executive Vice President, Paul Smith added, “We see this as an opportunity to strengthen the long term relationship we have with RenaissanceRe.”

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Comments (5)

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  1. Stinky D. says:

    More redundancies

  2. Vortex says:

    Clearly bad news for Bermuda, 2 island heavyweights, surely means consolidation and redundancies.

    Mr Burt, can you offer comment? Whilst I understand this is somewhat outside of your remit, Ren are domiciled here, you have infuence.

    Blockchain isn’t the answer, protecting jobs like this clearly is.

    • Real Deal says:

      actually block chain is the answer. so that there will be one that one basket of eggs.

      natural disasters are whooping their butts.

    • DS says:

      What does this have to do with Mr. Burt? Are you suggesting that the BDA gov should interfere in a mutually agreed M&A transaction?? And that will someone help position Bermuda as business friendly????

      Gotta love armchair business leaders and politicians.

  3. Wahoo says:

    More redundancies coming. Hurry up fintic and bitcoin.