Tokio Marine Holdings, Inc. · TSE:8766
Tokio Marine — Merger or Acquisition (October 2019)
26 slides from Tokio Marine's merger presentation, Oct 3, 2019
Slide 1: Acquisition of Privilege Underwriters, Inc. (“Pure Group”)
Acquisition of Privilege Underwriters, Inc. (“Pure Group”) October 3, 2019
Slide 2: Notes on Forward-Looking Statements
Notes on Forward-Looking Statements This presentation incorporates forward-looking statements that reflect current opinions, plans, outlooks, and forecasts regarding future events and business performance in connection with the Tokio Marine Group and the Pure Group. These statements are based on ass
Slide 3: Agenda
Agenda Summary ......................................................... Page 3 1. Overview of the Acquisition ........................... Page 5 2. Business model of Pure Group ....................... Page 7 3. Characteristics and Strengths of Pure Group ... Page 11 4. Strategic Rationale of the Ac
Slide 4: Summary 1/2
Summary 1/2 Transaction Highlight Acquisition of Privilege Underwriters, Inc. and its subsidiaries (“Pure Group”), a U.S. insurance group specialized in the U.S. High Net Worth (“HNW”) insurance market The acquisition is another step towards our goal of “Achieving sustainable profit growth and d
Slide 5: Summary 2/2
Summary 2/2 Characteristics and Strengths of Pure Group Rapidly growing P&C insurance group specializing in the U.S. HNW insurance market Business model with stable fee-based income and low capital intensity Top tier customer satisfaction and renewal ratio within the industry Talented and hi
Slide 6: 1. Overview of the Acquisition
1. Overview of the Acquisition Copyright (c) 2019 Tokio Marine Holdings, Inc. 5
Slide 7: Transaction Structure and Key Terms
Transaction Structure and Key Terms Transaction Cash acquisition of Privilege Underwriters, Inc. and its subsidiaries (Pure Group) by HCC Structure Insurance Holdings, Inc. USD 3.1Bn (JPY 325.5Bn) total consideration Expect profit after tax of c. USD 95M in FY2020, and c. USD 200M in FY 2023 (
Slide 8: 2. Business model of Pure Group
2. Business model of Pure Group Copyright (c) 2019 Tokio Marine Holdings, Inc. 7
Slide 9: Acquisition Target and the Reciprocal Exchange
Acquisition Target and the Reciprocal Exchange Policyholders = Shareholders Owner of Reciprocal Claim Premium/ payment Surplus contribution Holding Co. Privilege Underwriters, Inc. Privilege Underwriters Reciprocal 100% 100% Exchange Management (the Reciprocal) fee Other Subsidiaries PURE Risk Manag
Slide 10: Basic Information of Pure Group
Basic Information of Pure Group Breakdown of Premiums Under Management* Overview: A rapidly growing U.S. HNW P&C Others insurance group founded in 2006 (Excess liability, Watercraft) Inland Marine Current President & CEO: Ross Buchmueller （Jewelry, Fine Arts etc.） 11% 9% Headquarters: White Pl
Slide 11: What is a Reciprocal Exchange
What is a Reciprocal Exchange An insurance business structure in the U.S. along with stock/mutual company. More than 50 reciprocal exchanges operate in the U.S. (e.g. USAA (#7*), Farmers (managed by Zurich Group, #11*), Erie Insurance Exchange (#16*) etc.) *represents ranking in the U.S. P&C market
Slide 12: 3. Characteristics and Strengths of Pure Group
3. Characteristics and Strengths of Pure Group Copyright (c) 2019 Tokio Marine Holdings, Inc. 11
Slide 13: Strengths and Characteristics of Pure Group
Strengths and Characteristics of Pure Group Business model with stable fee-based income Rapidly growing P&C insurance group specializing in the U.S. HNW insurance market Top tier customer satisfaction and renewal ratio within the industry Talented and highly regarded management team with in- depth e
Slide 14: Business Model with Stable Fee-based Income
Business Model with Stable Fee-based Income The reciprocal structure encouraging alignment of interests between policyholders and the Reciprocal Exchange Majority of income generated from fees earned through the management of the Reciprocal Exchange Capital contribution primarily from policyho
Slide 15: Attractiveness of the U.S. HNW Insurance Market
Attractiveness of the U.S. HNW Insurance Market High growth potential with increase in number of HNW individuals Demand for high quality, customized value added services Not commoditized and less affected by digital technologies Historic and projected U.S. HNW U.S. HNW insurance market share*2
Slide 16: Future Growth Potential of Pure Group
Future Growth Potential of Pure Group High growth potential of the U.S. HNW insurance market Pure Group’s strong growth track record built upon its competitive advantage Pure Group’s growth initiatives to support continued growth (expand partnerships with major insurers, cross- selling to exis
Slide 17: Strong Customer Service Capability
Strong Customer Service Capability Provides comprehensive services that meet various needs of HNW customers Concierge service (single point of contact throughout the policy period including claim handling) Inspection of homes to assess appropriate insurance amount and provide advice for loss pre
Slide 18: High customer satisfaction and renewal ratio
High customer satisfaction and renewal ratio Customer Satisfaction Renewal Ratio** (Net Promoter Score*） Superior score not just in the P&C sector Top tier renewal ratio in the U.S. P&C but also compared to the global top brands industry (A-E are all major players） 73 77 97% 96% 90% 52 86% 47 83% 81
Slide 19: Management Team
Management Team Ross Buchmueller (Co-Founder, President & CEO) • Co-founded Pure Group in 2006. More than 30 years of experience in HNW business • Worked at Chubb for c. 12 years • Joined AIG in 1999 and built it’s HNW insurance division (Private Client Group) Martin Hartley (Co-Founder, President,
Slide 20: 4. Strategic Rationale of the Acquisition
4. Strategic Rationale of the Acquisition Copyright (c) 2019 Tokio Marine Holdings, Inc. 19
Slide 21: Continued Expansion of International Insurance Business
Continued Expansion of International Insurance Business 2000 2007 2012 2015 2018 2019 Pursue further growth and diversification Capture growth and further diversified into Announced in emerging markets Oct. 2019 Further Growth, Diversification and Acquired in Aug. 2018 invested in Dec. 2018 Capital
Slide 22: Acquisition aligned with our M&A Strategy and Criteria
Acquisition aligned with our M&A Strategy and Criteria M&A Strategy M&A Criteria Developed markets Solid business model Target Profitability Pursuing growth opportunities & risk diversification Cultural fit (Existence of excellent management who can share our corporate philosophy) ✔ Quality customer
Slide 23: Business Portfolio with limited Overlap and High Complementarity
Business Portfolio with limited Overlap and High Complementarity Homeowners Auto etc. Specialized in HNW Commercial insurance market Focused in NPO, package education, sports Liability etc. markets etc. complement Excess Workersʼ Medical Stop Compensation Loss Strength in employee Crop
Slide 24: Contribution to Group Financials
Contribution to Group Financials Realize further expansion in scale and profit of international business Addition of a stable fee-based business Limited overlap and complementary with our existing U.S businesses Achieve sustainable profit growth and capital efficiency via further diversificati
Slide 25: Generation of synergies by combining strengths of the two groups
Generation of synergies by combining strengths of the two groups Significant synergy potential by combining Tokio Marine Group’s strength with Pure Group’s customer base Our strengths Expand Pure Group’s customer base by enhancing the Financial strength creditworthiness of Pure Group as it leverage
Slide 26: For further information...
For further information... Investor Relations Group, Corporate Planning Dept. Tokio Marine Holdings, Inc. URL : www.tokiomarinehd.com/en/inquiry/ TEL : +81-3-3285-0350
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