Under the terms, Amlin Shareholders will be entitled to receive 670 pence in cash for each Amlin Share. This may have caused investor sentiment to weaken somewhat in the short run, although a major share price fall was relatively unlikely due to Amlin’s super-high yield, which should have provided support for the company’s valuation.
Amlin chief executive Charles Philipps called the deal “extremely compelling”.
In July, Meiji Yasuda Life Insurance Co [MEIJY.UL] agreed to buy StanCorp Financial Group Inc for $5 billion, and last month, Sumitomo Life agreed to buy U.S insurer Symetra Financial Corp for about $3.8 billion.
Speaking to this publication in the wake of the acquisition announcement, which will see MSI buy Amlin in a deal worth £3.47bn, Philipps said that the firms’ strategies were well aligned and that they had similar visions for the future.
The takeover adds to a flurry of deals among Amlin’s peers in the Lloyd’s and Bermuda insurance markets, while extending a bout of overseas expansion by insurers from Asia, where growth has slowed.
Operating in the Lloyd’s reinsurance market, Amlin sells marine and aviation insurance as well as reinsurance, a type of insurance bought by insurance companies.
The global consolidation has also come closer to home, with former England cricket team sponsor Brit taken over in February following a £1.2billion offer from Canadian insurance group Fairfax. Furthermore, a dividend yield of 5.7% indicates that Amlin’s shares were cheap and susceptible to bids from rivals seeking to expand and/or diversify their risk profiles. Amlin’s management would remain with the firm.
‘We believe this combination will create significant value for shareholders, and will also position the group to drive sustainable long term growth given the enhanced platform that the combined group will enjoy’.
Chief Executive Yasuyoshi Karasawa has said MS&AD was looking to buy into a European or US specialist insurer, and on Tuesday said Amlin’s role as the leader of Lloyd’s second-largest underwriter syndicate made it a flawless target. MSI’s presence in the ASEAN region and its ambitions in the United States clearly offer very exciting prospects for Amlin.