Tokio Marine of Japan Agrees to Acquire HCC Insurance for $7.5 Billion

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Tsuyoshi Nagano, the president of Tokio Marine, at the company's headquarters in Tokyo last week.Toru Hanai/Reuters
LONDON — Tokio Marine Holdings of Japan said on Wednesday that it had agreed to acquire HCC Insurance Holdings for $7.5 billion in cash in its latest bid to build on its business in the United States, the world’s largest insurance market.
The bid also mirrors moves by Tokio Marine’s domestic rivals to expand outside Japan, where an aging population is expected to cut into the results of insurers.
Tokio Marine, based in Tokyo, said the deal would broaden its product offerings, including accident and health insurance, directors’ and officers’ liability policies, agriculture insurance and other specialty lines.
Under the deal, Tokio Marine said it would pay $78 a share for all the outstanding shares of HCC, which is based in Houston. The offer represents a 37.6 percent premium to HCC’s closing price on Tuesday.
The transaction is expected to close in the fourth quarter. It is subject to approval by HCC’s shareholders and regulators.
Tsuyoshi Nagano, the Tokio Marine president, noted that HCC’s businesses were “largely noncorrelated, have limited catastrophe exposure and are less dependent on property and casualty market cycles.”
“HCC will further expand the revenues, profits and capabilities of Tokio Marine,” he said in a news release.
The deal is the latest in a series of acquisitions to expand Tokio Marine’s business in the United States in recent years.
It acquired Delphi Financial Group for $2.7 billion in 2012 and thePhiladelphia Consolidated Holding Corporation for $4.7 billion in 2008. Tokio Marine also bought the Kiln Group, an insurer based in London, for $898 million in 2008.
Other Japanese companies seeking to grow outside their home country include Dai-ichi Life Insurance, which agreed to buy the American company Protective Life Corporation in 2014 for about $5.7 billion. And over the past few years, Nippon Life Insurance Company, Dai-ichi and Sumitomo Life Insurance Company have each taken stakes in several Indonesian insurers in hopes of tapping the rapidly expanding Southeast Asian market.
Founded in 1879, Tokio Marine is one of Japan’s oldest insurers. It offers life, property and casualty insurance in Japan, as well as insurance and financial products internationally. The company had net written premiums of 2.87 trillion yen, or about $23 billion, and posted profit of ¥184.1 billion in the 2013 fiscal year. It has about 33,000 employees.
Founded in 1974, HCC underwrites more than 100 classes of specialty insurance products, including property and casualty insurance in the United States and professional indemnity and other lines out of London. The insurer had net written premiums of $2.4 billion and posted a profit of $458.3 million in 2014. HCC has about 2,500 employees and has offices in Britain, Ireland, Spain and the United States.
“With Tokio Marine, HCC gains an international footprint to expand our diverse portfolio and expertise globally, a financial foundation on which to compete with larger insurers and the opportunity to offer our clients expanded coverages,” Christopher J.B. Williams, the HCC chief executive, said in a news release.
Credit Suisse and Evercore and the law firm Sullivan & Cromwell advised Tokio Marine, while Goldman Sachs and the law firm Willkie Farr & Gallagher advised HCC.