MS&AD Insurance Holdings is to invest up to £800m ($1bn) in ReAssure Jersey One Limited, a UK unit of Swiss Re, in a two-stage deal which will see it first acquiring 5% of the target’s outstanding shares for £175mn by 31 March next year, and then subscribing over three years for new shares to bring its total holding up to 15%.
The Japanese company is the country’s largest wholly private sector insurer and has both life and nonlife units. The deal has been characterised by the Nikkei newspaper as representing “MS&AD’s first big investment in Europe, and the company looks to use it as a steppingstone for business expansion there and to diversify its revenue sources, which center on Japan and the rest of Asia”.
Just a month before, Sompo Holdings, one of Japan’s Big Three property and casualty insurers, agreed to sell Sompo Canopius, which it acquired in 2013 for US$970mn million, to a private equity consortium led by Centerbridge Partners for US$952mn.
As they seek to escape the constraints of a shrinking population, insurance companies have been very active in seeking overseas opportunities and Sompo gave its reason for disposing of Canopius as a lack of fit with Endurance Specialty Holding of the US which it acquired earlier this year.
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