Mitsui Sumitomo to Buy Amlin for $5.3B, Latest in Japanese Overseas Deals

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MS&AD Insurance Group Holdings Inc. agreed to buy Lloyd’s of London insurer Amlin plc for about 3.47 billion pounds ($5.3 billion), joining an overseas deal spree by Japanese peers. Amlin shares surged.

The Tokyo-based company’s Mitsui Sumitomo Insurance Co. unit will pay 670 pence per share in cash for the London-based insurer, MS&AD said Tuesday. 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.

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 U.S. firms in the past two months.

“MS&AD will purchase an established insurance company in developed markets with stable earnings,” Mac Salman, head of research on Japanese financial firms at Jefferies Group LLC in Tokyo, 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 655 pence at 8:29 a.m. in London. They had gained 3 percent this year through yesterday, the worst performing stock of any of its Lloyd’s peers. Shares of MS&AD fell 2.6 percent at the close of trading in Tokyo before the announcement, paring this year’s gain to 24 percent. The benchmark Topix index has climbed just 0.7 percent in 2015.

Insurers across the globe have been targeted in about $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.

Philipps, who expects to remain CEO of Amlin after the completion of the deal, said two weeks ago that the insurer was not for sale after reporting lower first-half profit and further declines in reinsurance prices. Amlin directors will recommend shareholders approve the deal, according to the statement.

“This is a wonderful transaction,” Philipps said. “It’s a win for MSI, a win for Amlin and a win for Amlin shareholders.”