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Tokio Marine Holdings To Acquire HCC Insurance Holdings In $7.5 Billion Transaction

Tokio Marine Holdings, Inc. (TMHD) and HCC Insurance Holdings, Inc. (HCC) (NYSE:HCC) today announced that they have entered into a definitive agreement under which TMHD will acquire all outstanding shares of HCC, a U.S. insurance holding company comprising property & casualty, accident & health and other specialty insurance businesses, for $78.00 in cash per share, through TMHD's wholly owned subsidiary, Tokio Marine & Nichido Fire Insurance Co., Ltd. (TMNF).

The acquisition price of $78.00 per share represents a 35.8% premium to HCC's average share price over the past one month and a 37.6% premium to the share price as of close of business on June 9, 2015. The total transaction value is approximately $7.5 billion, and the transaction is expected to close in the fourth quarter of 2015. The acquisition of HCC significantly enhances Tokio Marine's operations in the United States, the largest insurance market in the world, and internationally. With strong business platforms in Japan and in international markets, the transaction solidifies Tokio Marine's standing as a truly global insurer with premier specialty franchises. The transaction further expands Tokio Marine's product offerings and capabilities with market leading positions in new lines of business including Accident & Health (A&H), Directors' & Officers' liability (D&O), agriculture and other specialty lines globally. HCC, founded in 1974, underwrites more than 100 classes of specialty insurance products through three key segments.

  • North America Property & Casualty: a diverse portfolio of specialty businesses, including D&O, agriculture, primary casualty, aviation, surety, sports and entertainment disability/contingency and public risk, that require strong technical underwriting expertise;
  • A&H: market leading position in medical stop-loss and other medical products that are short-tail and not correlated with the traditional property & casualty insurance market cycle;
  • International: underwrites London market lines as well as global specialty businesses, including D&O, professional indemnity, surety and credit through Lloyd's and company platforms.

HCC has a proven track record of disciplined growth and best-in-class underwriting profitability, with industry leading underwriting experts across its businesses.

Tsuyoshi Nagano, President of Tokio Marine, said, "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. HCC is a top tier specialty insurer with market leading underwriting capabilities. Leveraging Tokio Marine's financial strength and global footprint, HCC will further expand the revenues, profits and capabilities of Tokio Marine."

Christopher J.B. Williams, Chief Executive Officer of HCC, said, "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. Tokio Marine's values and underwriting culture are aligned with HCC's. We believe the combination is an excellent extension of Tokio Marine's stated long-term business strategy, and we are excited to be a part of that strategy."

President Nagano concluded, "Tokio Marine has great respect for the consistent profitability that HCC has achieved under the leadership of its highly experienced management team. With shared values and the continued support from the management team, we will build a long and successful partnership together."

HCC represents 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. The transaction is expected to be EPS and ROE accretive to Tokio Marine.

Certain Transaction Terms: Under the terms of the agreement, Tokio Marine will acquire 100% of the shares of HCC for $78.00 in cash per share. HCC is permitted to continue to pay regular quarterly cash dividends of up to $0.295 per share, per quarter, until the transaction closes. The acquisition will be financed through the utilization of Tokio Marine's cash on hand together with borrowings. The consummation of the transaction is not subject to any financing condition.

Approvals and Timing: The Board of Directors of TMHD and the Board of Directors of HCC have unanimously approved the transaction. The acquisition is subject to the approval of HCC's shareholders and the approval of various regulatory authorities, as well as other customary closing conditions. The transaction is expected to close in the fourth quarter of 2015. Credit Suisse and Evercore acted as financial advisors to Tokio Marine in this transaction and Sullivan & Cromwell LLP provided external legal counsel. Goldman Sachs acted as financial advisor to HCC and Willkie Farr & Gallagher LLP provided external legal counsel.

Enquiries: Tokio Marine Holdings, Inc.Jun Ehara, ManagerCorporate Planning DepartmentEmail: This email address is being protected from spambots. You need JavaScript enabled to view it.: +81-3-5223 -3212 HCC Insurance Holdings, Inc.Doug Busker, Director of Investor RelationsEmail: This email address is being protected from spambots. You need JavaScript enabled to view it.: +1-713-996-1192

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