TMR bought from Japanese parent by fellow Bermudian RenaissanceRe at 1.02x tangible book value



RenaissanceRe has agreed to buy Tokio Millennium Re (TMR) from its Japanese parent company.

The deal sees RenRe buy its fellow Bermudian reinsurer at 1.02x tangible book value for approximately $1.5bn in cash and common shares, based on the company’s June 30 closing price.

The shares received by Tokio Marine will be valued at yesterday’s closing price of $128.37 per common share.

“This transaction will increase our scale, broaden our reach and extend our ability to apply our core strengths to a deeper customer base,” said Kevin O’Donnell, chief executive of RenRe.

“Our unique ability to capitalize on large, one-of-a-kind opportunities underscores our global reinsurance leadership, including in casualty and specialty lines, and our ability to execute on our successful, highly differentiated strategy,” O’Donnell added.

Under the terms of the deal, TMR’s Japanese parent Tokio Marine will provide RenRe with a $500m adverse development protection to guarantee TMR’s stated reserves at their closing value.

The deal includes a privately-placed “long-term investment” by US insurer State Farm, of $250m in RenRe common shares.

“Our acquisition of TMR and State Farm’s investment further enhance the relationship between our respective companies, which I am confident will prove equally beneficial to our shareholders,” said O’Donnell.

RenRe has also got a deal to cooperate with TMR on Tokio Marine’s reinsurance purchasing.

“After these transactions close, we anticipate that we will continue to have the very strong capital and liquidity position you have come to expect from RenaissanceRe,” O’Donnell added.

Both boards have unanimously approved the deal, which needs no further shareholder approvals.

Pending regulatory approvals the reinsurance merger is expected to close in the first half of 2019.