Top International Insurance M&As of 2020

Since it was first announced in March, the proposed Aon-Willis merger became the leading merger and non-merger insurance story of the entire year. But there were also other proposed and completed transactions that caught the eyes of Insurance Journal’s international readers. Here are some of the M&A articles that were most popular with readers of international news in 2020:

Aon to Buy Willis Towers Watson

Global insurance brokers Aon and Willis Towers Watson in March announced they had agreed to merge in an all-stock transaction with an implied combined equity value of approximately $80 billion. Upon completion of the combination, existing Aon shareholders will own approximately 63% and existing Willis Towers Watson shareholders will own approximately 37% of the combined company on a fully diluted basis. According to S&P, Aon intends to combine with Willis in an all-stock transaction valued at about $30 billion, with Willis shares being exchanged to Aon shares. The combined company will be named Aon. Combined the companies will have more than $20 billion in revenue. Aon reported $11 billion in revenue with $2.2 billion net income for 2019 compared to $9 billion revenue and $1.4 billion net income for Willis Towers Watson. Aon will maintain operating headquarters in London, United Kingdom. The parent company will be incorporated in Ireland. The combined firm will have 95,000 employees globally, with what the announcement said will be a “significant presence” in Chicago, New York and Singapore. John Haley will take on the role of executive chairman with a focus on growth and innovation strategy. The combined firm will be led by Greg Case and Aon Chief Financial Officer Christa Davies. The board of directors will comprise proportional members from Aon and Willis Towers Watson’s current directors. In December Aon confirmed that the European Commission has initiated a review of the proposed merger. Aon said the review is a common next step “for a transaction of this size and complexity” and said it remains on track to close the deal in the first half of 2021.

Third Point Re and Sirius Group Agree to Merger in Deal Worth $788M

Third Point Reinsurance and Sirius International Insurance Group, a global multi-line insurer and reinsurer, announced in August they had agreed to combine in a cash and stock transaction worth $788 million. The new company will be renamed SiriusPoint and will be based in Bermuda. Third Point Re will purchase Sirius from its parent company, China Minsheng Investment Group, for $100 million in cash and approximately 58 million of Third Point Re shares. Both Third Point Re and Sirius are headquartered in Bermuda. The transaction, which is expected to be completed in the first quarter of 2021, will create a global company with approximately $3.3 billion of tangible capital.

Zurich, Farmers Agree to Buy MetLife’s U.S. P/C Business for $3.94 Billion

Zurich Insurance and Farmers Exchanges in December agreed to buy MetLife’s U.S. property and casualty business for $3.94 billion, the insurers said, in an environment where the COVID-19 pandemic has made motor and home insurers more profitable. The Swiss insurer will contribute $2.43 billion to the deal through its Farmers Group Inc (FGI) unit, while the Farmers Exchanges will contribute $1.51 billion. The deal will give Farmers Exchanges, to which FGI provides administrative and management services, a nationwide presence in the U.S. and access to new distribution channels.

Arch Capital to Buy Watford for $700M in Cash, with Support from Former Rival Enstar

Arch Capital and Enstar Group had embarked in a bidding war for Watford Holdings during several months in late 2020. Ultimately, Arch emerged as the buyer by providing an all-cash offer valued at approximately $700 million. Enstar, which owns 9.1% of Watford’s common shares, at the same time agreed to abandon its quest to buy the insurer. In May 2020, activist investor Capital Returns Management LLC called for Watford to be sold or put into runoff, complaining about “consistently poor operating and stock performance” in comparison with its peers in the industry. When an initial offer of $31.00 per share was received in early October from Enstar, Ronald D. Bobman, president of New York-based Capital Returns, said, while he was encouraged by the offer, the price was still a significant discount “to the value of Watford’s extremely attractive book.” Under the final agreed deal, Arch will pay $35.00 per share for Watford.

Equity Firm Cinven, Singapore’s GIC to Buy Insurance Broker Miller from Willis

Private equity firm Cinven and GIC, Singapore’s sovereign wealth fund, in November agreed to acquire London-based specialist insurance and (re)insurance broker Miller from its partners and corporate member, Willis Towers Watson. Bloomberg reported that the deal values the business at about 680 million pounds ($896 million). Founded in 1902, Miller operates in the UK, Lloyd’s and internationally. It employs more than 640 people through its offices in London, Ipswich, Brussels, Paris, Singapore and Geneva. Miller’s specialty areas include marine, energy, credit and political risks, delegated authorities, professional risks, property, casualty, sports and entertainment and re/insurance. Miller places c. £2 billion worth of premiums annually. Cinven and GIC said they were attracted to invest in Miller based in part on it being a cash generative business model with a strong position in the wholesale insurance markets.

K2 Insurance Agrees to Acquire Pioneer Underwriters’ Portfolio

Pioneer Underwriters, the managing general agency, and K2 Insurance Services, the specialty insurance services holding company, in April signed terms for a portfolio transfer, to facilitate K2’s purchase of Pioneer. Under the transaction, Pioneer’s ongoing underwriting portfolio, together with underwriting and support staff, will transfer to K2. The transferred business will comprise underwriting units specializing in property catastrophe reinsurance, financial institutions, international property facultative and marine specialty. These units will continue to be based in London and will form the cornerstone for future growth in K2’s international platform. Together the units will underwrite approximately £150 million (US$185.2 million) of gross written premium in 2020, all of which is supported by high quality capacity providers, said a statement from London-based Pioneer.

UK Insurer RSA Accepts $9.6 Billion Cash Takeover Offer

Canada’s Intact Financial and Denmark’s Tryg announced in November they had agreed to buy British insurance group RSA for 7.2 billion pounds ($9.6 billion) in cash in one of Europe’s biggest financial takeovers of 2020. Best known in Britain for its “More Than” brand, RSA provides home, motor and commercial insurance and also has large operations in Canada, Ireland and Scandinavia. The proposed takeover would result in the break-up of the British group. Intact would gain RSA’s Canada, UK and international operations while Tryg would take the Sweden and Norway businesses. The pair would co-own RSA’s Danish unit.

Tokio Marine Completes Acquisition of Pure Group

Tokio Marine Holdings announced in February that it had completed the acquisition of New York-based Privilege Underwriters Inc. and its subsidiaries, known as Pure Group, which specializes in the U.S. high net worth insurance market. The acquisition price was $3.1 billion (approximately JPY 325.5B). The deal was completed through Tokio Marine’s wholly owned subsidiary HCC Insurance Holdings, Inc. Tokio Marine acquired 100% of Privilege Underwriters Inc.’s shares from existing shareholders that include Stone Point (51%), KKR (34%), AXA XL (10%), Pure management and others (5%).For 2018, Pure reported fee income of $229 million, a before-tax profit of $73 million and $963 million premiums under management. Its business profile is composed of homeowners (57%), auto (23%), inland marine (9%), and other lines for high-net worth clients.

Allianz Buys U.K.’s LV General Insurance and Legal & General’s Non-Life Unit

Allianz Holdings plc, the UK subsidiary of Allianz SE, in January completed its acquisition of the remaining 51% of LV General Insurance Group from Liverpool Victoria Friendly Society. The total consideration by Allianz for 100 percent of LV GIG will be up to £1.078 billion (US$1.429 billion). In a separate deal, Allianz Holdings announced it has completed the acquisition of 100 percent of the General Insurance division of L&G GI for £242 million ($320.8 million). This business is being combined with LV GIG, although the Legal & General brand will continue to be used in the UK general insurance market for up to three years, said Guildford, England-headquartered Allianz Holdings. The completion of these deals positions Allianz Holdings as the number two general insurer in the UK.

French Mutual Covéa Scraps $9 Billion Purchase of PartnerRe from EXOR

EXOR announced in March it had agreed to sell PartnerRe to French mutual insurer Covéa. By May, however, Covéa had scrapped the deal, as a result of market dislocation caused by the coronavirus pandemic. In August, however, EXOR and PartnerRe drew a line under the failure of the deal by Covéa agreeing to some investments in EXOR as well as investments in a number of special purpose insurance vehicles managed by PartnerRe. EXOR bought the Bermuda-based reinsurer in March 2016 for $6.72 billion in cash.

India’s Future Group to Sell Stake in Insurance Joint Venture with Generali

India’s Future Group said in April that it has picked UBS Group AG to lead the sale of its stake in an insurance joint venture with Italy’s Assicurazioni Generali SpA, according to people familiar with the matter. Future Group is working with the Swiss bank on the plans to dispose its share of the Future Generali life and general insurance businesses, said the people, asking not to be identified as the discussions are private. The Indian group, which controls companies including Amazon.com Inc.’s local retail partner, has held initial discussions with potential buyers, the people said.

Tysers (Integro) Completes Acquisition of Lloyd’s Broker RFIB

Integro Insurance Brokers Holdings Ltd., the parent of UK-based firm Integro Insurance Brokers Ltd., which trades under the Tysers brand, announced in June it had completed its acquisition of Risk Transfer Group, the privately owned principal parent company of RFIB, an independent specialist Lloyd’s broker. London-based Integro and Tysers merged their insurance operations in 2018.

AXA Sells Persian Gulf Business for $269 Million to Kuwaiti-Based Group

In November, AXA SA said it sold its Persian Gulf business for $269 million to a Kuwait-based group, as the French insurance giant shifts its focus and exits some overseas investments to shore up its finances amid the coronavirus pandemic. The Paris-based insurer said it sold its stakes in AXA Gulf, AXA Cooperative Insurance Co. and AXA Green Crescent Insurance Co. to Gulf Insurance Group, a Kuwaiti insurance group in which Canada’s Fairfax Financial Holdings is a major shareholder. As part of the AXA transaction, Gulf conglomerate Yusuf Bin Ahmed Kanoo will sell its shareholdings in AXA Gulf and AXA Cooperative Insurance Co. The total value of the sale to Gulf Insurance Group, which is expected to close by the third quarter 2021, is $475 million. Gulf Insurance Group is acquiring a business that focuses predominantly on health and property insurance, with more than 30 branches and a sales footprint in Saudi Arabia, the United Arab Emirates, Bahrain, Oman and Qatar.

Investors Pelican Ventures, J.C. Flowers to Buy Ariel Re from Argo

Pelican Ventures and J.C. Flowers & Co., both private equity investors with significant insurance expertise, announced in November that they have agreed to acquire reinsurance franchise Ariel Re from Argo Group for an undisclosed sum. Ariel Re is a global underwriter of property and casualty reinsurance operating through Lloyd’s Syndicate 1910. Argo purchased Ariel Re in February 2017. Argo Group recently has taken a series of steps to restructure its business after some poor results and a leadership change. As part of the Ariel Re deal, Pelican Ventures and J.C. Flowers also announced that they have agreed on terms for an operational partnership with Apollo Syndicate Management Ltd. to further develop SPA 6133, a Lloyd’s special purpose arrangement (SPA) focused on property catastrophe reinsurance. Under the partnership, Pelican Ventures and J.C. Flowers will provide additional capital, operational support and distribution.

Argo Group Agrees to Sell Its Italian Business

Argo Group International Holdings Ltd., a Bermuda-based underwriter of specialty insurance, has agreed to sell its Italian operations, ArgoGlobal Assicurazioni S.p.A (AGA) to Perfuturo Capital AG, a Swiss holding company. Perfuturo is fully owned by Philantra Holding AG – a green, technology and renewable energy specialist. Closing is expected in early 2021. Financial details of the transaction were not disclosed. “We are confident that Perfuturo’s expertise and knowledge of the European market will allow AGA to thrive,” said Matt Harris, Argo Group head of international operations. “This transaction aligns with our strategy to simplify the business and streamline operations. “Argo Group will continue to focus on specialty insurance lines of business that we expect will result in profitable growth and improved shareholder value,” Harris said.

Generali to Purchase AXA’s Greek Operations for $203 Million

Assicurazioni Generali SpA agreed to buy the Greek operations of French insurer AXA SA as part of its plans to expand in European non-life and health businesses. The Italian company will pay 165 million euros ($203 million) for AXA Greece, equivalent to 12.2 times 2019 earnings, subject to closing adjustments, it said in the statement. Generali has also extended an existing distribution agreement between AXA and Alpha Bank AE by 20 years beyond its current expiration date of March 2027. AXA currently sells insurance products in Greece through a long-term distribution agreement with Alpha Bank, making the renegotiation of the partnership a key step for the agreement. The business distributes its products through a network of more than 600 agents. In 2019, AXA Greece posted total gross insurance premiums of about 168 million euros.

Nexus Completes Acquisition of Hiscox MGA Marine Business

Independent specialty managing general agent Nexus Group announced it completed the acquisition of the Hiscox MGA Marine business (HMM) from Hiscox MGA Ltd. on Dec. 30, 2020 via an asset purchase into Millstream Underwriting Ltd., a Nexus Group company which specializes in consumer insurance. The team in HMM underwrites yachts and the marine trades industry. The business was originally established in 2012 and acquired by Hiscox in 2015. Hiscox will continue to provide underwriting capacity for the business alongside other existing markets, led by long-standing supporters Talbot and AXA XL. HMM will become an integral part of Millstream and the business will continue to operate as usual.

Topics Mergers & Acquisitions