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RenaissanceRe’s $1.5bn acquisition of Tokio Millennium Re approved

13th March 2019 - Author: Steve Evans

Bermudian reinsurance firm RenaissanceRe has had its $1.5 billion acquisition of Japanese re/insurance group Tokio Marine’s reinsurance units approved by regulators.

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The acquisition, which was announced back in October 2018, sees RenaissanceRe acquiring the Tokio Millennium Re AG and Tokio Millennium Re (UK) Limited units from the Japanese giant Tokio Marine Holdings, Inc.

The deal covers underwriting entities based in Bermuda, London and Zurich, in a deal valued at roughly $1.5 billion in total consideration, made up of payments from RenaissanceRe to Tokio Marine of around $1.22 billion of cash and $250 million of RenaissanceRe common shares.

Late yesterday, RenaissanceRe said that it had received all the necessary regulatory approvals for the transaction, clearing the final hurdles to completing the acquisition.

The target had always been to close the M&A deal during the first-half of 2019 and that looks to be on-track.

Now that the regulatory approvals have been received, RenaissanceRe said that both parties involved anticipate closing the transaction as soon as possible, subject to satisfying any customary closing conditions.

As part of this arrangement, RenaissanceRe has also secured an agreement that sees it with preferential access to participate in some of the international reinsurance purchases of Tokio Marine and its affiliates.

In addition, Tokio Marine is putting up a $500 million adverse development cover, that will protect Tokio Millennium Re’s stated reserves at the closing of the acquisition, including any unearned premium reserves.

As a result, RenaissanceRe gets the benefits of acquisition, plus access to risk from one of the largest insurance group’s in the world, as well as protection across the portfolio and tail-risk that Tokio Millennium Re held.

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