UPDATE: Tokio Marine To Buy Delphi Financial Group For $2.66 Billion
21 December 2011 - 8:14PM
Dow Jones News
Tokio Marine Holdings Inc. (8766.TO) said Wednesday that it has
agreed to buy Delphi Financial Group Inc. (DFG) for $2.66 billion,
or Y205 billion, in the latest sign of how the yen's strength is
providing Japanese firms with ammunition to hook up with companies
outside Japan to offset the dim outlook at home.
Japan's largest nonlife insurer by market value said the
transaction for the Delphi shares is expected to be completed in
the April-June quarter of 2012. Tokio Marine said it will include
earnings from the Wilmington, Del.-based company in its group
results from the fiscal year beginning April 2012.
The move is the latest illustration of how the nation's
insurance sector has been actively looking for a bigger slice of
market share and growth opportunities outside of its home market
through M&A activities, in the face of headwinds in Japan, with
its shrinking population and sluggish economy. The yen's strength
is also giving Japanese companies a catalyst to press ahead with
the buying spree.
The company said the U.S. life insurance and casualty insurance
market is the biggest in the world with a market size valued at Y89
trillion and still has potential for future growth. The deal, it
said, will help further strengthen Tokio Marine's business base in
the U.S.
The nonlife insurer said the deal will boost its profit sources
from overseas business activities, estimating that 46% of its
profits will come from activities outside Japan after the deal,
compared with the current ratio of 37%.
"The acquisition of Delphi is an important step in this
development, serving to further diversify our business mix in the
United States," said Shuzo Sumi, President of Tokio Marine. "Delphi
is an outstanding insurance group with a strong focus on niche
business lines in the employee benefits market," he said.
Delphi is a financial services company focused on specialty
insurance and insurance-related businesses. It racked up core
premium and fee income worth $1.42 billion in the year ended
December 2010.
Tokio Marine has already made significant overseas acquisitions,
buying U.K. insurer Kiln for about Y95 billion and U.S.
Philadelphia Consolidated Holding Co. for $4.7 billion in 2008.
In August, the company said it would acquire the remaining
shares it doesn't already own in First Insurance Company of Hawaii
Ltd. for about $165 million (Y12.9 billion).
-By Hiroyuki Kachi, Dow Jones Newswires; 813-6269-2789;
Hiroyuki.Kachi@dowjones.com
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