Accelerates Strategy and Enhances Global
Reinsurance Leadership
Transaction Immediately Accretive to
RenaissanceRe’s Shareholders
Long-Term Investment in RenaissanceRe by
State Farm
RenaissanceRe Holdings Ltd. (NYSE:RNR) (“RenaissanceRe” or the
“Company”) announced today that it has entered into a definitive
agreement with Tokio Marine Holdings, Inc. (“Tokio Marine”)
pursuant to which an affiliate of RenaissanceRe will acquire Tokio
Marine’s reinsurance platform, which includes Tokio Millennium Re
AG and Tokio Millennium Re (UK) Limited (collectively, “TMR”).
Under the terms of the transaction, Tokio Marine will receive 1.02x
the tangible book value of TMR delivered to RenaissanceRe at
closing. If closing tangible book value is unchanged from June 30,
2018, Tokio Marine would receive approximately $1.5 billion in
total consideration, consisting of cash and RenaissanceRe common
shares.
RenaissanceRe expects that upon closing the transaction will be
immediately accretive to book value per share, tangible book value
per share, operating earnings per share and operating return on
equity.
The agreement has been unanimously approved by the Boards of
Directors of both companies. The transaction is expected to close
in the first half of 2019 and is subject to customary closing
conditions and regulatory approvals. No shareholder approval is
required.
Under the terms of the agreement, if closing tangible book value
is unchanged from June 30, 2018, the transaction consideration
would consist of approximately $1.22 billion of cash and $250
million of RenaissanceRe common shares. The shares received by
Tokio Marine will be valued at today’s closing price of $128.37 per
common share, subject to adjustment at closing and a one-year
holding period commencing at closing. The cash consideration will
be funded through RenaissanceRe available funds and a potential
pre-closing dividend from TMR, subject to regulatory approval.
In connection with the transaction, Tokio Marine has agreed to
provide RenaissanceRe a $500 million adverse development cover that
will protect TMR’s stated reserves at closing, including unearned
premium reserves. In addition, Tokio Marine and RenaissanceRe will
enter a business cooperation agreement, which will enhance their
business relationship and facilitate cooperation on a portion of
the international reinsurance purchases of Tokio Marine and its
affiliates.
In addition, State Farm Mutual Automobile Insurance Company
(“State Farm”) has agreed to invest $250 million in RenaissanceRe
through its purchase of RenaissanceRe’s common shares in a private
placement, following termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
The shares purchased by State Farm will be valued at today’s
closing price of $128.37 per common share. Following the completion
of its investment, State Farm will own approximately 4.8% of
RenaissanceRe’s total common shares outstanding, reflecting a
broader relationship with RenaissanceRe that includes State Farm’s
investments in RenaissanceRe-managed vehicles Top Layer Reinsurance
Ltd. and DaVinciRe Holdings Ltd.
Kevin O’Donnell, President and CEO of RenaissanceRe commented:
“We are very pleased to have entered into a definitive agreement to
acquire Tokio Millennium Re from Tokio Marine. This transaction
will increase our scale, broaden our reach and extend our ability
to apply our core strengths to a deeper customer base. Our unique
ability to capitalize on large, one-of-a-kind opportunities
underscores our global reinsurance leadership, including in
Casualty and Specialty lines, and our ability to execute on our
successful, highly differentiated strategy.”
Mr. O’Donnell added: “We are also honored that State Farm has
agreed to broaden its relationship with RenaissanceRe by investing
in our common shares and extending a long-standing partnership
between our two firms. Our acquisition of TMR and State Farm’s
investment further enhance the relationship between our respective
companies, which I am confident will prove equally beneficial to
our shareholders. After these transactions close, we anticipate
that we will continue to have the very strong capital and liquidity
position you have come to expect from RenaissanceRe.”
State Farm Executive Vice President, Paul Smith, offered, “We
see this as an opportunity to strengthen the long term relationship
we have with RenaissanceRe.”
BofA Merrill Lynch is acting as financial advisor to
RenaissanceRe in connection with the transaction and Willkie Farr
& Gallagher LLP as legal counsel. Wachtell, Lipton, Rosen &
Katz is acting as legal counsel to RenaissanceRe’s Board of
Directors in connection with the transaction.
Conference Call and Webcast:
RenaissanceRe will discuss this transaction as part of its
regularly scheduled investment community conference call on
Wednesday, October 31, 2018, at 10:00 a.m. ET. In addition,
interested persons may access a slide presentation regarding the
transaction, which will be available from approximately 7:00 a.m.
ET on October 31, 2018, and a live webcast of the conference call
via the Investors section of RenaissanceRe's website at
www.renre.com. An archive of the call will be available from
approximately 2:00 p.m. ET on October 31, 2018 through midnight ET
on January 9, 2019.
About RenaissanceRe
RenaissanceRe is a global provider of reinsurance and insurance
that specializes in matching well-structured risks with efficient
sources of capital. The Company provides property, casualty and
specialty reinsurance and certain insurance solutions to customers,
principally through intermediaries. Established in 1993, the
Company has offices in Bermuda, Ireland, Singapore, Switzerland,
the United Kingdom, and the United States.
Cautionary Statement Regarding Forward-Looking
Statements
Any forward-looking statements made in this Press Release
reflect the current views of RenaissanceRe with respect to future
events and financial performance and are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. These statements are subject to numerous factors that
could cause actual results to differ materially from those set
forth in or implied by such forward-looking statements, including
the following: the failure to obtain regulatory approvals or
satisfy other conditions to completion of the proposed Tokio
Millennium Re transaction; risks that the proposed transaction
disrupts current plans and operations; the ability to recognize the
benefits of the proposed transaction; the amount of the costs,
fees, expenses and charges related to the proposed transaction; the
frequency and severity of catastrophic and other events that the
Company covers; the effectiveness of the Company’s claims and claim
expense reserving process; the Company’s ability to maintain its
financial strength ratings; the effect of climate change on the
Company’s business; collection on claimed retrocessional coverage,
and new retrocessional reinsurance being available on acceptable
terms and providing the coverage that we intended to obtain; the
effects of U.S. tax reform legislation and possible future tax
reform legislation and regulations, including changes to the tax
treatment of the Company’s shareholders or investors in the
Company’s joint ventures or other entities the Company manages; the
effect of emerging claims and coverage issues; continued soft
reinsurance underwriting market conditions; the Company’s reliance
on a small and decreasing number of reinsurance brokers and other
distribution services for the preponderance of its revenue; the
Company’s exposure to credit loss from counterparties in the normal
course of business; the effect of continued challenging economic
conditions throughout the world; a contention by the Internal
Revenue Service that Renaissance Reinsurance Ltd., or any of the
Company’s other Bermuda subsidiaries, is subject to taxation in the
U.S.; the success of any of the Company’s strategic investments or
acquisitions, including the Company’s ability to manage its
operations as its product and geographical diversity increases; the
Company’s ability to retain key senior officers and to attract or
retain the executives and employees necessary to manage its
business; the performance of the Company’s investment portfolio;
losses that the Company could face from terrorism, political unrest
or war; the effect of cybersecurity risks, including technology
breaches or failure on the Company’s business; the Company’s
ability to successfully implement its business strategies and
initiatives; the Company’s ability to determine the impairments
taken on investments; the effect of inflation; the ability of the
Company’s ceding companies and delegated authority counterparties
to accurately assess the risks they underwrite; the effect of
operational risks, including system or human failures; the
Company’s ability to effectively manage capital on behalf of
investors in joint ventures or other entities it manages; foreign
currency exchange rate fluctuations; the Company’s ability to raise
capital if necessary; the Company’s ability to comply with
covenants in its debt agreements; changes to the regulatory systems
under which the Company operates, including as a result of
increased global regulation of the insurance and reinsurance
industry; changes in Bermuda laws and regulations and the political
environment in Bermuda; the Company’s dependence on the ability of
its operating subsidiaries to declare and pay dividends; aspects of
the Company’s corporate structure that may discourage third-party
takeovers or other transactions; the cyclical nature of the
reinsurance and insurance industries; adverse legislative
developments that reduce the size of the private markets the
Company serves or impede their future growth; consolidation of
competitors, customers and insurance and reinsurance brokers; the
effect on the Company’s business of the highly competitive nature
of its industry, including the effect of new entrants to, competing
products for and consolidation in the (re)insurance industry; other
political, regulatory or industry initiatives adversely impacting
the Company; increasing barriers to free trade and the free flow of
capital; international restrictions on the writing of reinsurance
by foreign companies and government intervention in the natural
catastrophe market; the effect of Organisation for Economic
Cooperation and Development or European Union (“EU”) measures to
increase the Company’s taxes and reporting requirements; the effect
of the vote by the U.K. to leave the EU; changes in regulatory
regimes and accounting rules that may impact financial results
irrespective of business operations; the Company’s need to make
many estimates and judgments in the preparation of its financial
statements; and other factors affecting future results disclosed in
RenaissanceRe’s filings with the Securities and Exchange
Commission, including its Annual Reports on Form 10-K and Quarterly
Reports on Form 10-Q.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181030006141/en/
Investor Contact:RenaissanceRe Holdings Ltd.Keith McCueSenior
Vice President, Finance & Investor Relations441-239-4830orMedia
Contacts:RenaissanceRe Holdings Ltd.Keil GuntherVice President,
Marketing & Communications441-239-4932orKekst CNCPeter Hill or
Dawn Dover, 212-521-4800
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