With Japanese insurers suffering due to prolonged low interest rates domestically and dwindling demand in some core lines of insurance business, adding specialist underwriting businesses to their stable will prove very attractive. Sompo has been planning to “build a globally diversified business portfolio in order to achieve further growth and improvement of ROE, has been considering the acquisition of an insurance company with strength in insurance business in developed and emerging countries.”īy acquiring Endurance “SOMPO aims to build a genuinely integrated global insurance business by bringing in great talent, which will stimulate significant development and transformation in SOMPO’s overseas insurance business.”Īt $93 per share Endurance’s core shareholders, including CEO John Charman, will have realised a very attractive profit through the transaction, as it offers a price to book ratio of x1.36 times Endurance’s book value per ordinary share, and a 40.3% premium to the average share price for the past three months.īut Sompo Holdings considers the price “fair and reasonable” after valuing Endurance and its assets, as well as the contribution buying the re/insurer could add to the group. Sompo Holdings said that it is “aiming to establish a position where it is able to compete effectively against global players… For its overseas insurance business, SOMPO is pursuing a drastic expansion of its scale and earnings through organic growth and disciplined M&A both in developed and emerging countries.” With Sompo Japan one of the largest Japanese insurance groups, any deal to acquire Endurance outright would provide a strong signal to the market that underwriting franchises that offer diversification, specialisms and a core stake in major global reinsurance markets could be attractive acquisition targets. ![]() ![]() The valuation is a significant premium on the share price, as of a couple of days ago, although that share price itself rose 35% during the course of yesterday after the Nikkei broke the news. market, specialty insurance products, reinsurance across the gamut of lines of business and collateralised reinsurance products as well as ILS investment fund management through the Blue Capital platform.Īs mergers and acquisitions go, in the insurance and reinsurance space, this is a fairly sizable deal, with Sompo Japan now set to acquire all of the outstanding shares of Endurance, a transaction which can go ahead without tender offer due to Bermuda’s corporate laws, according to the Nikkei.Ĭompletion of the acquisition could be as soon as the end of February 2017, but at least by the end of March 2017, according to Sompo Holdings. The aggregate purchase price is said to be 639.4 JPY, Sompo’s largest acquisition to date, and a total consideration said to be $6.304 billion.Īdding Endurance provides a Bermuda headquartered platform, with a focus on the U.S. in a deal described as “friendly” by the firm. The acquisition has been effected through Sompo Holdings subsidiary Sompo Japan Nipponkoa Insurance Inc. But the strategic rationale for the acquisition which has now been confirmed this morning by Sompo Holdings is to create a globally integrated and diversified insurance and reinsurance business. Sompo is already a global player, with Sompo Canopius providing a London-based specialty re/insurance platform for the firm. ![]() The acquisition has now been confirmed this morning by both parties. Japanese newspaper the Nikkei reported first yesterday that insurance group Sompo Japan Nipponkoa Insurance, a division of Sompo Holdings, was working to acquire Endurance as the firm looked to further diversify its sources of revenue. Endurance Specialty Holdings Ltd., Bermuda-based property and casualty insurance and reinsurance firm and owner of collateralised reinsurance and ILS fund manager Blue Capital Management Ltd., has been acquired by Sompo Japan for a total consideration of $6.304 billion.
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