$7.5 billion takeover of American insurance giant announced

Japan’s Tokio Marine announced yesterday it has agreed to pay $7.5 billion for one of the biggest names in specialty insurance.

Insurance News


Another major US insurance company has agreed to an acquisition by Tokio Marine.

The Japanese holdings company announced Wednesday that it will pay $7.5 billion in cash to acquire HCC Insurance Holdings, one of the largest American specialty insurance companies, in order to build its business in the United States. That breaks down to $78 a share for all outstanding shares of Houston-based HCC, including a 37.6% premium to HCC’s closing price on Tuesday.

HCC underwrites more than 100 classes of specialty insurance products, including property/casualty lines in the US and professional indemnity out of the London market. It had net written premiums of $2.4 billion in 2014, and posted a profit of $458.3 million. In the first quarter, the insurer’s profit increased 6% to $112.9 million, while revenue grew by 2%.

As of last year, HCC employed about 2,500 people in offices in the US, Britain, Ireland and Spain.

HCC Chief Executive Christopher J.B. Williams celebrated the announcement as a beneficial expansion for the carrier.

“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,” Williams said in a statement.

Tokio Marine said the deal would broaden its footprint and expand product offerings in the accident and health insurance, directors’ and officers’ liability policies and agriculture insurance sectors, as well as in other specialty lines.

“HCC will further expand the revenues, profits and capabilities of Tokio Marine,” said Tsuyoshi Nagano, president of the company. “[HCC’s businesses] are largely noncorrelated, have limited catastrophe exposure and are less dependent on property and casualty market cycles.”

The deal is subject to HCC’s shareholders and regulators, but is expected to close in the fourth quarter of this year.

This is not the first time Tokio Marine has sought assets in the US insurance industry. In 2008, it bought the Philadelphia Consolidated Holding Corporation for $4.7 billion, and in 2012, it acquired Delphi Financial Group for $2.7 billion.

Credit Suisse and Evercore advised Tokio Marine on the deal, while Goldman Sachs and the law firm Willkie Farr & Gallagher advised HCC.

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