Tokyo, Japan and Hamilton,
Bermuda, 5 October 2016 - SOMPO Holdings, Inc ("SOMPO") and
Endurance Specialty Holdings Ltd. ("Endurance") today announced
that they have entered into a definitive agreement for the
acquisition of 100% of the outstanding ordinary shares of Endurance
by SOMPO for US$93 per share in cash.
-
The aggregate consideration is JPY 637.5 bn
(approximately US$ 6, 304 m[i]), which
represents approximately a 40.3% premium to Endurance's closing
share price on 3 October 2016 and approximately a 41.6% premium to
the average share price over the last 3 months
-
The acquisition has been approved by the Board
of Directors of Endurance and is subject to Endurance shareholder
approval at a shareholders' meeting
-
The acquisition will be effected through SOMPO's
wholly owned subsidiary, SOMPO Japan NI Inc. ("SJNI") and will be
financed with existing sources of liquidity and supplementary
facilities without a financing contingency
-
The transaction is subject to the clearances and
approvals of applicable regulatory authorities, as well as other
customary closing conditions
-
It is expected that the transaction will close
before the end of SOMPO's current fiscal year end (31 March
2017)
Background to the
Acquisition
SOMPO's ambition is to build a
business which competes effectively on a global scale while at the
same time, as part of its structural transformation, enhancing its
offering to become a best in class customer service provider. By
achieving this, it will realise its goal of providing insurance and
related services of the highest quality which contribute to the
security, health and wellbeing of its customers worldwide.
-
SOMPO is significantly expanding its overseas
insurance business and expects to deliver a material expansion of
its footprint through both organic growth and disciplined M&A
in the coming years. This will bring both top and bottom line
growth to the business and will emanate from developed and emerging
markets
-
SOMPO has already been actively strengthening
its operating base and driving earnings growth by expanding its
overseas insurance business through various acquisitions in the
past six years, including the acquisitions of Fiba Sigorta (Turkey,
2010), Berjaya SOMPO (Malaysia, 2011), the acquisition of a further
stake in Maritima (Brazil, 2013) and the acquisition of Canopius
(Lloyd's, 2014). As it has been building a globally diversified
business portfolio, SOMPO has been considering the acquisition of
an insurance company which has strengths in the primary insurance
business in developed and emerging markets
-
Endurance is a global specialty insurance and
reinsurance group with an experienced management team led by a
world-class CEO with a strong track record as well as an
underwriting team with excellent underwriting capabilities. It
operates its insurance and reinsurance businesses in, among other
countries, the U.S., the U.K. and Bermuda. SOMPO believes that
through this acquisition, it will accelerate its goal to expand the
footprint, growth and earnings of its overseas insurance business,
while delivering growth and improvement in return on equity for its
shareholders
Kengo Sakurada, President and CEO
of SOMPO Holdings, Inc, commented: "Today's
agreement marks the beginning of SOMPO's overseas transformation
which undoubtedly enhances the quality and reach of our insurance
services. Endurance brings strength in the primary insurance
business in developed markets.
"Endurance also
brings a highly experienced executive team led by one of the
world's leading P&C CEOs in John Charman. Mr. Charman, and
certain shareholders associated with Mr. Charman, representing in
the aggregate approximately 4.9% of Endurance ordinary shares, have
agreed to vote in favor of the proposed transaction.
"This acquisition
will be integral in helping SOMPO realize its goal of providing
insurance and related services of the highest quality which
contribute to the security, health and wellbeing of its
customers."
John Charman, Endurance CEO,
added: "Today, we have strategically aligned
ourselves with SOMPO, a large, well capitalized and highly
respected global insurance (and reinsurance) company headquartered
in Japan. This signals the beginning of an exciting new chapter for
Endurance, our wonderful and incredibly talented people and our
much valued clients. When I joined Endurance just over three
years ago, I stated quite publicly that cost efficient scale,
globally diversified insurance and reinsurance products as well as
market relevance were absolutely essential to our future success. I
also signaled that I would seek out a high quality, strong Asian
partner to further complement our global business capabilities for
the future. Our alignment today with SOMPO achieves all those goals
and promises so much more.
"Critically, both
our companies share and practice important values daily - a
commitment to the highest levels of loyalty, integrity and client
service. These stated values are clearly reflected in our
disciplined, focused underwriting approach which has deeply
embedded, strong risk management practices. It is with great honour
and with much joy that we all look forward to being welcomed as
important family members of SOMPO. Finally, to our Endurance
shareholders, we thank you for your loyalty and trust over the
years and are happy that you have been rewarded with an attractive
premium for your investment."
Overview of
Endurance
Endurance began operations in
2001, as an insurance and reinsurance company in Bermuda, and has
expanded to become a global specialty provider of insurance and
reinsurance operations worldwide including in the U.S., the U.K.
and Bermuda.
-
Endurance underwrites a wide variety of
insurances such as crop insurance, in which Endurance has the fifth
largest presence in the U.S. (based on underwriting insurance fees
for FY2015), property, casualty and specialty lines of insurance
and reinsurance
-
Endurance has built a well-balanced underwriting
portfolio while achieving stable and profitable business operations
by establishing an advanced enterprise risk management system
-
Since Mr. Charman, the current CEO of Endurance,
joined the management team in 2013, the business has expanded not
only in the U.S. but also in the U.K., including through the
acquisition of a Lloyd's business in 2015. The focus has been on
improving profitability, based on disciplined, expert, underwriting
and pursuit of growth through M&A
-
For the fiscal year to 31 December 2015,
Endurance had US$4,856m in consolidated net assets, US$3,321m of
premium and fee income, US$344m of consolidated net income and a
combined ratio of 82.9%
Strategic
Rationale
-
Strengthen management fundamentals
-
As part of SOMPO's medium-term objectives, the
business aims to achieve adjusted consolidated profit of JPY 300bn
and adjusted consolidated ROE of more than 10% from the fiscal year
2020 onwards
-
Based on SOMPO's and Endurance's FY2015 business
performance, the combined operations would equate to a JPY 32.1bn
increase in adjusted consolidated profit from JPY 164.3bn to JPY
196.4bn and a 1.3pp increase in adjusted consolidated return on
equity from 6.9% to 8.2%
-
Income from SOMPO's overseas insurance business
as a percentage of the total group income would increase from 12%
currently to approximately 27%, delivering an immediate
diversification of its business portfolio and allowing it to
strengthen its group management fundamentals
-
Accelerate growth of insurance business
worldwide
-
Endurance has been expanding its business in the
U.S., the U.K., Bermuda and other countries through launching new
business units and executing M&A transactions led by a highly
experienced management team. Throughout, it has maintained its high
levels of profitability, including through disciplined, expert
underwriting by its sophisticated underwriting team
-
Importantly, Mr. Charman and other members of
the Endurance management team have agreed to continue to operate
Endurance and the combined international business following the
acquisition for at least five years, with Mr. Charman leading the
Board of the international business as Chairman and CEO. Mr.
Charman will report directly to SOMPO's Group CEO, Kengo
Sakurada
-
Through this acquisition, not only will SOMPO
acquire a strong operating base in the U.S., the world's largest
insurance market, but it will also significantly benefit from the
continuity of the Endurance management team, which will enable it
to further expand its footprint and earnings by combining
Endurance's operations with SOMPO group's existing international
insurance and reinsurance businesses worldwide - including Lloyd's
- under the leadership of the Endurance management team
Acquisition
Process
-
Under, and in accordance with, applicable laws
and regulations in Bermuda, the acquisition will be implemented
through SJNI's special purpose company in Bermuda, Volcano
International Limited and then merging it into Endurance, with
Endurance as the surviving company. Through this process, SJNI will
purchase all of Endurance's outstanding ordinary shares in return
for the payment of cash consideration to Endurance's
shareholders
-
This acquisition is subject to the approval of
Endurance shareholders at a shareholders' meeting, and to
clearances and approvals of applicable regulatory authorities, as
well as other customary closing conditions
-
SOMPO intends to proceed expeditiously with this
acquisition and anticipates the transaction will close before the
end of March 2017
Estimated
financial impact on SOMPO
SOMPO will update the market in
due course with regards to the effect of the acquisition on SOMPO's
financial operating performance.
For further
information:
Newgate Communications (PR adviser to SOMPO)
Steffan Williams
Charlie Chichester
Clotilde Gros
Zoë Pocock
|
+44 (0)20 7680 6500 sompo@newgatecomms.com |
Kekst (PR adviser to
Endurance)
Mark Semer
Ruth Pachman
Peter Hill
|
+1 212 521 4800
endurance@kekst.com |
Citi acted as financial advisor to
SOMPO in this transaction and Shearman & Sterling LLP provided
external legal counsel. Morgan Stanley acted as financial advisor
to Endurance and Skadden, Arps, Slate, Meagher & Flom LLP
provided external legal counsel.
A joint press conference will be
held in London at 10.00am BST on Friday 7th October. To
attend, or for dial-in/webcast details, please register by emailing
sompo@newgatecomms.com .
Notes to
Editors
About
SOMPO
SOMPO is one of the top three
insurers in Japan and has a global network of businesses. Listed
and headquartered in Japan with a growing presence in the UK the
company engages in the provision of insurance services, operating
through Domestic Property and Casualty Insurance, Domestic Life
Insurance, Overseas Insurance as well as other services including
pensions, asset management and healthcare businesses.
SOMPO was founded in Japan in 1888
and has since built a global network in 32 countries operating in
Europe, North America, Central and South America, Asia and Oceania,
and the Middle East and Africa. The Company employs more than
78,000 people worldwide.
SOMPO seeks to realize sustainable
growth and greater corporate value, based on striving to secure
earnings from its domestic P&C insurance while aggressively
devoting greater management resources to growth fields such as
domestic life insurance and overseas insurance. The Group's
investment plan is not just limited to being a provider of
insurance products but aims to position itself as the best customer
service provider both at home and abroad and has evolved to offer a
wider range of services aimed at providing even more customers with
products that provide security, health, and wellbeing.
Learn more about the Group by
visiting www.sompo-hd.com/en/
About
EnduranceSpecialty Holdings Ltd.
Endurance Specialty Holdings Ltd.
is a global specialty provider of property and casualty insurance
and reinsurance, headquartered in Bermuda. Through its operating
subsidiaries, including Lloyd's Syndicate 5151, Endurance writes
agriculture, professional lines, property, marine and energy, and
casualty and other specialty lines of insurance and catastrophe,
property, casualty, professional lines and specialty lines of
reinsurance. We maintain excellent financial strength as evidenced
by the ratings of A (Excellent) from A.M. Best (XV size category),
A (Strong) from Standard and Poor's and A2 from Moody's on our
principal operating subsidiaries. In addition, Standard &
Poor's has recognized Endurance as an industry leader in risk
management with an ERM rating of "Strong" - a distinction that
places the company in the top 20% of North America and Bermuda
insurance companies. For more information about Endurance,
please visit www.endurance.bm.
Cautionary Note
Regarding Forward-Looking Statements
Some of the statements in this
press release may include, and Endurance may make related oral,
forward-looking statements which reflect its current views with
respect to future events and financial performance. Such statements
may include forward-looking statements both with respect to
Endurance in general and the insurance and reinsurance sectors
specifically, both as to underwriting and investment matters. These
statements may also include assumptions about the proposed
transaction (including its benefits, results, effects and timing).
Statements which include the words "should," "would," "expect,"
"intend," "plan," "believe," "project," "anticipate," "seek,"
"will," and similar statements of a future or forward-looking
nature identify forward-looking statements in this press release
for purposes of the U.S. federal securities laws or otherwise.
Endurance intends these forward-looking statements to be covered by
the safe harbor provisions for forward-looking statements in the
U.S. Private Securities Litigation Reform Act of 1995.
The proposed transaction is
subject to risks and uncertainties, including: (A) that Endurance
and SOMPO may be unable to complete the proposed transaction
because, among other reasons, conditions to the closing of the
proposed transaction may not be satisfied or waived; (B)
uncertainty as to the timing of completion of the proposed
transaction; (C) the inability to complete the proposed transaction
due to the failure to obtain Endurance shareholder approval for the
proposed transaction or the failure to satisfy other conditions to
completion of the proposed transaction, including that a
governmental entity may prohibit, delay or refuse to grant approval
for the consummation of the transaction; (D) the occurrence of any
event, change or other circumstances that could give rise to the
termination of the merger agreement; (E) risks related to
disruption of management's attention from Endurance's ongoing
business operations due to the proposed transaction; (F) the effect
of the announcement of the proposed transaction on Endurance's
relationships with its distributors, operating results and business
generally and (G) the outcome of any legal proceedings to the
extent initiated against Endurance, SOMPO or others following the
announcement of the proposed transaction, as well as Endurance's
and SOMPO's management's response to any of the aforementioned
factors.
The foregoing review of important
factors should not be construed as exhaustive and should be read in
conjunction with the other cautionary statements that are included
herein and elsewhere, including the risk factors included in
Endurance's most recent report on Form 10-K and other documents of
Endurance on file with or furnished to the U.S. Securities and
Exchange Commission ("US SEC"). Any forward-looking
statements made in this press release are qualified by these
cautionary statements, and there can be no assurance that the
actual results or developments anticipated by Endurance will be
realized or, even if substantially realized, that they will have
the expected consequences to, or effects on, Endurance or its
business or operations. Except as required by law, the parties
undertake no obligation to update publicly or revise any
forward-looking statement, whether as a result of new information,
future developments or otherwise.
Additional
Information and Where to Find It
In connection with the proposed
transaction, Endurance will file with the US SEC a proxy statement
on Schedule 14A and may file or furnish other documents with the US
SEC regarding the proposed transaction. This press release is not a
substitute for the proxy statement or any other document which
Endurance may file with the US SEC. INVESTORS IN AND SECURITY
HOLDERS OF ENDURANCE ARE URGED TO READ THE PROXY STATEMENT AND ANY
OTHER RELEVANT DOCUMENTS THAT ARE FILED OR FURNISEHD OR WILL BE
FILED OR WILL BE FURNISHED WITH THE US SEC, AS WELL AS ANY
AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN
THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION AND RELATED
MATTERS. Investors and security holders may obtain free
copies of the proxy statement (when available) and other documents
filed with or funished to the US SEC by Endurance through the web
site maintained by the US SEC at www.sec.gov or by contacting the
investor relations department of Endurance at the following:
Investor
Relations Contacts:
Investor
Relations SOMPO
Telephone: +81 (0)3-3349-3913
E-Mail: ir@sompo-hd.com
Investor RelationsEndurance
Telephone: 441-278-0988
E-Mail: investorrelations@endurance.bm
Participants in
the Solicitation
Endurance and its directors and
executive officers may be deemed to be participants in the
solicitation of proxies from Endurance's shareholders in connection
with the proposed transaction. Information regarding
Endurance's directors and executive officers, including a
description of their direct interests, by security holdings or
otherwise, is contained in Endurance's Annual Report on Form 10-K
for the year ended 31December 2015 and its annual proxy statement
filed with the US SEC on 8 April 2016. A more complete
description will be available in the proxy statement on Schedule
14A. You may obtain free copies of these documents as
described in the preceding paragraph filed, with or furnished to
the US SEC because they will contain important information.
All such documents, when filed or furnished, are available free of
charge at the US SEC's website (www.sec.gov) or by directing a
request to Endurance at the Investor Relations contact above.
[i]FX rate:
USD/JPY=101.12 as of the end of September 2016
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Endurance Specialty Holdings Ltd via
Globenewswire
Endurance Splty (NYSE:ENH)
Historical Stock Chart
From Jul 2024 to Aug 2024
Endurance Splty (NYSE:ENH)
Historical Stock Chart
From Aug 2023 to Aug 2024