Tokio Marine Holdings to buy US HNW insurer Pure Group for $3.1bn

Tokio Marine Holdings has agreed to buy 100 percent of the outstanding shares of US firm Privilege Underwriters and its subsidiaries, known as the Pure Group, for $3.1 billion (approximately ¥ 325.5 billion).

The insurance group specialises in the US P&C high net worth (HNW) insurance market and will be acquired by Tokio Marine’s wholly owned subsidiary, HCC Insurance Holdings.

The global insurer expects to complete the purchase between January and March in 2020, subject to regulatory approvals.

Tokio Marine said that since Pure Group was established in 2006, it has achieved rapid growth in excess of the general US P&C insurance market to become one of the top three HNW specialists.

It said the purchase of the Pure Group “will contribute to sustainable profit growth and capital efficiency of Tokio Marine through Pure Group’s continued high growth potential in the world’s largest P&C insurance market, as well as its stable fee-based business and low capital intensity”.

Pure Group’s business has limited overlap with Tokio Marine’s existing US business, the global insurer said, and the expansion into this niche specialty business complements and further diversifies Tokio Marine’s business portfolio in terms of revenues, profits and customer segments.

This latest acquisition is part of the global group’s efforts to expand the scale and profitability of its international business as the key growth driver for the overall group. “We have been pursuing organic and strategic M&A initiatives in both developed and emerging markets in order to capture growth opportunities in the global insurance market and to build a further diversified business portfolio,” Tokio Marine said.

It follows the acquisitions of Kiln Ltd, Philadelphia Consolidated Holdings Corp, Delphi Financial Group, Inc. and HCC Insurance Holdings, Inc, which have all been agreed in the years since 2008.

Tokio Marine said: “We have also been actively seeking growth opportunities in emerging markets where we expect to see attractive mid-to-long term growth as seen in our recent acquisition of Insurance Australia Group Limited’s P&C business in Thailand and Indonesia as well as our minority investment in Hollard Group which engages in both life and P&C business in South Africa and other Sub-Saharan countries.”

The global insurer also said it had acted to align its business portfolio with the current global business environment and its business strategy, which is demonstrated by the divestment of its reinsurance business Tokio Millennium Re in March 2019. This was done to enable the firm to focus on its core strategy of expanding profitable and stable primary insurance business, notably specialty insurance, it added.

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