Pembroke, Bermuda-based RenaissanceRe has completed the acquisition of Tokio Millennium Re (TMR) for $1.5bn, after receiving all the required regulatory approvals.
RenaissanceRe entered into an agreement with Tokio Marine to acquire Tokio Millennium Re last October.
The acquisition includes Tokio Millennium Re AG and Tokio Millennium Re (UK), collectively known as Tokio Millennium Re.
RenaissanceRe president and CEO Kevin J. O’Donnell said: “The acquisition of TMR accelerates our strategy and enhances RenaissanceRe’s global reinsurance leadership, product offerings and access to attractive risk.
“The bespoke structure of this transaction also strengthens our long-standing relationship with Tokio Marine Group. Our entire team is excited about the expanded opportunities that the TMR platform will bring to deliver the best underwriting solutions in the business while maximizing shareholder value.”
As per the terms of the transaction, RenaissanceRe had agreed to Tokio Marine 1.02 times the tangible book value for TMR during the closing the transaction.
The company stated that if the book value is unchanged from last June, Tokio Marine will receive $1.5bn as consideration and will include $1.22bn in cash and its $250m in common shares of RenaissanceRe, valued at $128.37 per common share. The shares will be subject to adjustment at closing and one-year holding period beginning from the date the transaction is closed.
Regulatory approval for the deal was received in the second week of this month.
In connection with the deal, Tokio Marine has agreed to offer RenaissanceRe a $500m in adverse development cover that will protect TMR’s stated reserves during the closing, including unearned premium reserves.
The two companies will also enter into a business cooperation which is expected to strengthen their business relationship and facilitate cooperation on a portion of international reinsurance purchases of Tokio Marine and its affiliates.
Additionally, State Farm Mutual Automobile Insurance will buy common shares worth $250m in RenaissanceRe in private placement, after terminating the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. It will be equal to 4.8% stake in the company’s total shares in RenaissanceRe.