TKOMY Tokio Marine Holdings Inc (PK)

By Megumi Fujikawa 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 4, 2019).

TOKYO -- A U.S. insurance company that caters to wealthy Americans found a Japanese buyer in a $3.1 billion deal.

Tokio Marine Holdings Inc., which controls Japan's top insurer of cars, houses and other property, said it would buy Pure Group, part of its search for new sources of revenue outside the shrinking Japanese market.

Pure Group, of White Plains, N.Y., gets fees for managing a reciprocal-insurance market targeted at people with homes valued at more than $1 million. Pure, founded in 2006, competes with larger rivals Chubb Ltd. and American International Group Inc.

"In this market, customers prefer high-quality and customized services. In other words, products are not commoditized and not vulnerable to technological innovation and digitization," Tokio Marine Holdings Chief Executive Satoru Komiya said at a news conference.

As of Sept. 30, Greenwich, Conn., private-equity firm Stone Point Capital LLC owned 51% of Pure's shares, followed by KKR & Co. with 34%.

In reciprocal-insurance exchanges, members pool their risk and cover one another's claims, with a company such as Pure serving as the manager and charging fees for its services.

Tokio Marine has been chasing overseas deals over the past decade. Its biggest purchase in the U.S. came in 2015 when it bought specialty insurer HCC Insurance Holdings for $7.5 billion.

"We always look for ways to diversify geographical, business and product risks," Mr. Komiya said. A company spokesman said a recent increase in typhoons and other natural disasters in Japan raised the need to seek income in other countries.

Mr. Komiya said he thought Pure would complement Tokio Marine's other operations in the U.S. "Pure has a relatively short history, and its financial capacity is not so big," he said. "In that sense, the big platform we have built in the U.S. must be attractive to Pure."

In 2018, Pure's management unit oversaw an insurance business that brought in premiums of $963 million. Tokio Marine expects the U.S. company's pretax profit to increase to $270 million in 2023 from $73 million in 2018.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

October 04, 2019 02:47 ET (06:47 GMT)

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