August 11, 2015 / 11:29 AM / 4 years ago

Japan's Sumitomo Life to buy U.S. insurer Symetra for $3.8 billion

TOKYO (Reuters) - Japan’s Sumitomo Life has agreed to buy U.S insurer Symetra Financial Corp SYA.N for about $3.8 billion, the latest multi-billion deal in the world’s largest insurance market by acquisitive Japanese companies.

Japan’s life insurance market, the world’s second-largest, has been relatively profitable and stable but its weak growth prospects amid a rapidly ageing population have prompted major domestically focused players to look overseas.

Tokio Marine Holdings Inc (8766.T) in June agreed to buy HCC Insurance Holdings Inc (HCC.N) for $7.5 billion, while late last month Meiji Yasuda Life Insurance Co [MEIJY.UL] agreed to buy StanCorp Financial Group Inc SFG.N for $5 billion.

Reuters reported last week Bellevue, Washington-based Symetra had been exploring the possibility of selling itself and possible suitors included Sumitomo Life Insurance Co [SMTLI.UL], Japan’s fourth-largest life insurer.

Sumitomo, with 27 trillion yen ($216.2 billion) in assets, will pay $32 per share for Symetra, representing a 32 percent premium to the U.S. company’s average share price in the past month. Symetra shareholders will also receive a previously announced special dividend of $0.50 per share in cash.

Chief Executive Thomas Marra and its management team will continue to lead the business in the United States.

Shares of Symetra were up 6.7 percent in premarket trading.

OVERSEAS BUSINESS

Founded in 1957, Symetra provides employee benefits, annuities and life insurance. It is partly owned by White Mountains Insurance Group Ltd (WTM.N), a holding company of several financial services companies.

Symetra’s largest shareholders, White Mountains and Berkshire Hathaway (BRKa.N), which have about 18 percent and 17 percent respectively, have agreed to vote in favor of the transaction, Symetra said in a statement.

Sumitomo Life has hitherto had only minimal overseas operations, consisting of minority stakes in insurance companies in China, Vietnam and Indonesia.

The company said the acquisition of Symetra will boost the proportion of its overseas business to 14 percent in premium revenue and 8 percent in adjusted profits, based on its previous year’s results.

Goldman Sachs (GS.N) is acting as financial advisor to Sumitomo Life and Morgan Stanley (MS.N) to Symetra, the two insurers said.

With three of Japan’s top four life insurers having made multi-billion U.S. deals, including Dai-ichi Life Insurance Co’s (8750.T) $5.6 billion acquisition of Protective Life, industry leader Nippon Life will likely draw attention as the next big buyer.

Nippon Life, with $500 billion in assets, has said it is looking for overseas targets and could spend up to 1.5 trillion yen on acquisitions and investments at home and abroad over the next 10 years.

Additional reporting by Rachel Chitra in Bengaluru; Editing by Maju Samuel and David Holmes

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