MSP Underwriting, a global specialty underwriter and Munich Re subsidiary, has been acquired by Cincinnati Financial Corporation for an all-cash transaction of £102 million.
Based on MSP’s projected net asset value at closing, the deal will see the firm become a wholly-owned subsidiary of Cincinnati Financial and will continue to operate under its own brand and with its existing leadership team.
“Adding MSP Underwriting to the Cincinnati family brings experienced underwriters who we believe will open opportunities for us to support our agents in new geographies and lines of business,” commented Steven J. Johnston, President and Chief Executive Officer.
“And, it complements our existing large commercial account, excess and surplus lines, high net worth personal lines and reinsurance assumed growth initiatives,”
The transaction has been approved by Cincinnati’s board of directors and is expected to close in the first quarter of 2019.
Cincinnati expects the acquisition to generate an attractive return over time.
The impact of the acquisition on Cincinnati’s consolidated 2019 and 2020 financial results will depend on a variety of factors, including timing of the close, valuation of intangible assets and transaction costs.
Based on current assumptions, the company expects the acquisition to be accretive to 2019 net income.
“Munich Re is a longtime and valuable reinsurance partner. We are pleased to work with them through this transaction,” added Johnston.
“MSP’s size allows us to follow our proven strategy of building successful insurance businesses over time – just as we have with our excess and surplus lines subsidiary and our reinsurance assumed business.”
Peter Röder, member of the board of management of Munich Re, commented, “Cincinnati Financial is perfectly suited for enhancing MSP Underwriting’s business and we are looking forward to seeing the company prosper within Cincinnati Financial.”
“After the sale, Munich Re will have a focused and less complex set-up in order to drive profitable growth within the Lloyd’s market, instead of running two platforms in parallel.”
“We remain committed to the Lloyd’s market, and will continue to grow the business within Munich Re Syndicate Ltd.”