Wed, Sep 09, 2015 - Page 15 News List

MS&AD to buy Britain’s Amlin for US$5.3 billion


MS&AD Insurance Group Holdings Inc agreed to buy Lloyd’s of London insurer Amlin PLC for about £3.47 billion (US$5.32 billion), joining an overseas deal spree by Japanese peers.

The Tokyo-based company’s Mitsui Sumitomo Insurance Co unit is to pay £6.70 per share in cash for the London-based insurer, MS&AD said yesterday.

The deal represents a 36 percent premium on Monday’s closing price and is 2.4 times the firm’s net tangible book value, the highest multiple paid for any Lloyd’s insurer, Amlin chief executive officer Charles Philipps said on a conference call with reporters.

“This is a wonderful transaction,” said Philipps, who expects to remain CEO of Amlin after the completion of the deal. “It’s a win for MSI, a win for Amlin and a win for Amlin shareholders.”

Amlin directors are to recommend shareholders approve the deal, according to the statement.

The takeover adds to a flurry of deals among Amlin’s peers in the Lloyd’s and Bermuda insurance markets, while extending a bout of overseas expansion by insurers from Asia, where growth has slowed. Japan’s Sumitomo Life Insurance Co and Meiji Yasuda Life Insurance Co agreed to buy US firms in the past two months.

“MS&AD will purchase an established insurance company in developed markets with stable earnings,” Jefferies Group LLC Tokyo-based analyst Mac Salman wrote in a note before the terms of the deal were announced. “This will enable MS&AD to use the reinsurance and risk know-how in its divisions abroad.”

Amlin shares soared by a record 33 percent to £6.55 at 8:29am in London, while those of MS&AD fell 2.6 percent at the close of trading in Tokyo before the announcement.

Insurers across the globe had been targeted in about US$81 billion of deals this year before Amlin, more than double the amount for the same period a year ago. The UK’s Catlin Group Ltd and Brit PLC each sought safety this year in a merger with a larger firm as an influx of reinsurance capital pushes prices lower and spreads into other lines of business.

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