Tokio Marine To Acquire US Peer HCC Insurance In $7.5 Bln Deal

(RTTNews) - Japanese insurance holding company Tokio Marine Holdings, Inc. (TKOMF, TKOMY) agreed Wednesday to acquire U.S. peer HCC Insurance Holdings, Inc. (HCC) for $78.00 per share in an all-cash deal valued at $7.5 billion. The deal, which has the unanimous approval of boards of both companies, is expected to close in the fourth quarter of 2015.

"In line with the strategy to expand our International business, the acquisition enables Tokio Marine to build a more diversified and highly profitable global portfolio with low volatility, taking into account the nature of HCC's businesses which are largely non-correlated, have limited catastrophe exposure and are less dependent on property & casualty market cycles," Tokio Marine President Tsuyoshi Nagano said.

Houston, Texas-based HCC Insurance is a U.S. insurance holding company comprising property & casualty, accident & health and other specialty insurance businesses.

The deal will significantly boost Tokio Marine's operations internationally and in the U.S., the largest insurance market in the world. It will also further expand the revenues, profits, product offerings and capabilities of Tokio Marine.

Further, it will help Tokio Marine gain market leading positions in new lines of business including Accident & Health (A&H), Directors' & Officers' liability (D&O), agriculture and other specialty lines globally.

With strong business platforms in Japan and in international markets, the deal will help solidify Tokio Marine's standing as a truly global insurer with premier specialty franchises.

The acquisition price of $78.00 per share represents a 37.6 percent premium over HCC's closing share price of $56.69 on Tuesday. It also represents a 35.8 percent premium HCC's average share price over the past one month. The deal is expected to be earnings per share and return on equity accretive to Tokio Marine.

The deal will be funded through the utilization of Tokio Marine's cash on hand together with borrowings. However, the consummation of the deal is not subject to any financing condition.

Meanwhile, Tokio Marine has permitted HCC to continue to pay regular quarterly cash dividends of up to $0.295 per share, per quarter, until the deal closes.

The closure of the deal is subject to the approval of HCC's shareholders and the approval of various regulatory authorities, as well as other customary closing conditions.

The deal to acquire HCC is Tokio Marine's most significant acquisition since it acquired Delphi Financial Group, Inc. in 2012, and Philadelphia Consolidated Holding Corp. and Kiln Ltd. in 2008.

"This transaction yields significant value for HCC's shareholders. With Tokio Marine, HCC gains an international footprint to expand our diverse portfolio and expertise globally, a financial foundation on which to compete with larger insurers and the opportunity to offer our clients expanded coverages. HCC CEO Christopher Williams stated.