Japan’s SOMPO Holdings Inc. has agreed to acquire all of the outstanding ordinary shares of Bermuda’s Endurance Specialty Holdings Ltd. for $93 per share in cash. The aggregate consideration is approximately $6.3 billion, which represents approximately a 40.3 percent premium to Endurance’s closing share price on October 3, 2016 and approximately a 41.6 percent premium to the average share price over the last three months.
Endurance CEO John Charman and other members of the Endurance management team have agreed to continue to operate Endurance and the combined international business following the acquisition for at least five years, with Charman leading the board of the international business as chairman and CEO. Charman will report directly to SOMPO’s Group CEO Kengo Sakurada.
The acquisition has been approved by the board of directors of Endurance and is subject to Endurance shareholder approval at a shareholders’ meeting. The transaction is subject to approvals of regulatory authorities. It is expected that the transaction will close before March 31, 2017, the end of SOMPO’s current fiscal year.
SOMP said the acquisition will be effected through its wholly owned subsidiary, SOMPO Japan NI Inc. and will be financed with existing sources of liquidity and supplementary facilities without financing.
Endurance has been expanding its business in the U.S., the U.K., Bermuda and other countries through launching new business units. Charman tried to acquire Aspen Insurance Holdings in a hostile takeover bid in 2014 but his move was rebuffed and then withdrawn. Last year Endurance purchased Montpelier Re Holdings Ltd.
Endurance has operations in the U.S., Europe and Asia.
SOMPO said it hopes to “significantly” expand its overseas insurance business through both organic growth and acquisitions in the coming years. It has already been active in acquisitions in recent years, including the acquisitions of Fiba Sigorta (Turkey, 2010), Berjaya SOMPO (Malaysia, 2011), the acquisition of a further stake in Maritima (Brazil, 2013) and the acquisition of Canopius (Lloyd’s, 2014).
After the Endurance deal closes, income from SOMPO’s overseas insurance business as a percentage of the total group income would increase from 12 percent currently to approximately 27 percent.
For the fiscal year ending December 31, 2015, Endurance had $4.8 billion in consolidated net assets, $3.3 billion of premium and fee income, $344 million of consolidated net income and a combined ratio of 82.9.