Accelerates Strategy and Enhances Global Reinsurance Leadership
Transaction Immediately Accretive to RenaissanceRe’s Shareholders
Long-Term Investment in RenaissanceRe by State Farm
PEMBROKE, Bermuda--(BUSINESS WIRE)--Oct. 30, 2018--
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/
Source: RenaissanceRe Holdings Ltd.
Investor Contact:
RenaissanceRe Holdings Ltd.
Keith McCue
Senior
Vice President, Finance & Investor Relations
441-239-4830
or
Media
Contacts:
RenaissanceRe Holdings Ltd.
Keil Gunther
Vice
President, Marketing & Communications
441-239-4932
or
Kekst
CNC
Peter Hill or Dawn Dover, 212-521-4800