The second biggest casualty insurance company in Japan, Tokio Marine is purchasing the American company Delphi Financial Services, which is based in Delaware.
The acquisition will be for $2.7 billion, which places a valuation on the company which has a 73 percent premium, indicating that Asian companies may be taking their first steps into the U.S. marketplace as a diversification effort, following the disasters that have struck their own local markets.
This acquisition is one of the five largest insurance purchases this year and is easily among the biggest ventures from a Japanese organization into the United States. It will give Tokio Marine insurance risk diversification from outside the Asia Pacific region, where there have been catastrophic earthquakes and tsunamis, as well as flooding.
For every Delphi class A share, $43.875 will be paid by Tokio Marine, and for every class B share, they will pay $52.875. This deal will also provide the existing shareholders of Delphi a share dividend of $1 upon the closing of the deal in 2012’s second quarter.
This is the second biggest that Tokio Marine has made in the United States, as it also made a purchase in 2008 of the Philadelphia Consolidated Holdings for more than $4.7 billion. This latest acquisition is a clear push to provide itself with risk diversification. The insurer, based in Tokyo, also purchased Kiln Group in that same year for almost $1 billion. That company is a Lloyds of London insurance market member.
It isn’t yet known whether Tokio Marine has any intention to continue an expansion into international regions outside of the Asia Pacific area.