Comprehensive M&A data with integrated detailed company information

MS&AD books deal with Swiss Re
Posted on Friday, 06 October 2017 10:50
MS&AD Insurance of Japan has set its sights on growth in the largest and most mature life insurance market in Europe through a GBP 800.00 million, two-step investment in a UK closed book life business belonging to Swiss Re.

First, the overseas player will buy 5.0 per cent of St Helier-based ReAssure Jersey One, which obtains existing policies from other protection providers instead of direct underwriting, for GBP 175.00 million.

This initial investment – funded by cash on hand – values the six-year-old company at GBP 3.50 billion and is expected to close during the quarter running from January to March 2018.

It also implies a multiple of 0.85 times price to book value, based on shareholders’ equity as of the six months ended 30th September 2017.

Second, MS&AD has committed to subscribing to new shares in ReAssure worth a further GBP 625.00 million over a three-year period to end up with a 15.0 per cent stake.

Ultimately, the agreement is worth as much as GBP 800.00 million and, according to Zephyr, the M&A database published by Bureau van Dijk, would be one of the UK’s largest insurance deals of the year to date.

Putting the price tag to one side, the investment is expected to act as a springboard for growth as MS&AD is looking to diversify existing revenues streams.

ReAssure is ranked second in the UK’s closed book life industry and has completed more than ten acquisitions since 2003.

This sector in the European country offers consolidation prospects with an estimated GBP 300.00 billion potential closed book liabilities available on the market.

Low interest rates and tighter regulations “have pushed open life insurance businesses to shift their focus toward capital-light products and services”, according to the acquisition presentation.

MS&AD’s overseas investment comes on the heels of an agreement in August to buy 97.7 per cent of First Capital Insurance, billed as Singapore’s largest commercial property and casualty cover provider, for USD 1.60 billion.

Zephyr shows this purchase is the tenth-largest global insurance deal of 2017 to date.

© Zephus Ltd