Tokio Marine to buy Philadelphia Cons

By David Dolan

TOKYO (Reuters) - Tokio Marine Holdings Inc plans to buy non-life insurer Philadelphia Consolidated Holding Corp for about $4.7 billion (2.4 billion pounds), in the largest acquisition by a Japanese financial firm in the United States.

Tokio Marine, Japan's largest non-life insurer, said it would pay $61.5 in cash for each share of Philadelphia Consolidated Holding, a 73 percent premium to the issue's closing price on Tuesday of $35.55.

Tokio Marine President Shuzo Sumi told Reuters earlier this month that he was looking at opportunities to acquire U.S. and European competitors to expand outside Japan, where it generates four-fifths of its profits.

Japanese insurers face limited prospects for expansion at home given the declining population and slow-growth economy.

"They face the options of either turning to asset management or going overseas, and M&A is the most efficient way to do this," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management

Tokio Marine, which completed the purchase of Lloyd's of London insurer Kiln Ltd for 442 million pounds in March, said it would leverage Philadelphia's strength in property and casualty (P&C) insurance products to expand in the United States.

"Combined with the recently completed acquisition of Kiln, we have established a strong presence in both the key U.S. P&C and London insurance markets," Sumi said in a release.

Tokio Marine said it expected the transaction to be completed in the fourth quarter of 2008 and that it would consolidate Philadelphia's earnings into its financial statements from the financial year starting April 2009.