Tokio Marine to Buy Delphi Financial for $2.7 Billion

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Tokio Marine said on Wednesday it will buy U.S. insurer Delphi Financial Group for $2.7 billion, the latest in a string of deals by Japan’s second-largest property-casualty insurer aimed at growing outside its mature home market.

Tokio Marine said it would pay $43.875 for each class A share, compared with the last traded price in New York of $25.43.

Tokio Marine, which spent $4.7 billion to acquire U.S. insurer Philadelphia Consolidated in 2008, said the deal would mark its entrance into the U.S. life insurance market as it seeks growth opportunities outside Japan.

“We have been building up our presence in the U.S. since the Philadelphia acquisition and the purchase of Delphi allows us to expand on that presence,” Tokio Marine President Shuzo Sumi told a news conference. “This does not mark the end of M&A for us. We will continue to search for things that can help us grow.”

Tokio Marine, which also bought Lloyd’s of London insurer Kiln in 2008, said it would pay for Delphi with cash on hand and borrowings. It said it expected the deal, which includes a $1.00 dividend payment to all Delphi shareholders, to close in the second quarter of 2012.

Japanese non-life insurers have been active acquirers overseas to offset sluggish conditions in Japan. In May this year industry leader MS&AD agreed to buy a 50 percent stake in the life insurance unit of Indonesian conglomerate Sinar Mas for about 67 billion yen [$860 million].

Tokio Marine said it was advised on the deal by Macquarie Capital, while Lazard acted as financial adviser to Delphi.