Sumitomo Life to Acquire Symetra for $3.76 Billion
August 13, 2015 by Renée Kiriluk-Hill, associate editor, BestWeek: renee.kiriluk-hill@ambest.com
TOKYO – Sumitomo Life Insurance Company of Japan said it plans to acquire Symetra Financial Corp. for $3.76 billion.
Symetra, a major U.S. stop-loss insurer, is to become a wholly owned subsidiary of Sumitomo and continue to operate from Bellevue, Washington.
Sumitomo said it believes the acquisition would enhance its “financial and earnings foundation as it will expand the size of overseas revenues, leading to diversifying the revenue base, and enabling the company to build a well-balanced overseas business portfolio across Asia and the United States.”
This deal is another in a recent merger and acquisition spree of Japanese insurance companies in the U.S. market. Meiji Yasuda Life Insurance Co. in July agreed to acquire StanCorp Financial Group Inc. for about $5 billion. In June, Tokio Marine Holdings Inc. agreed to acquire HCC Insurance Holdings Inc. for $7.5 billion. Dai-ichi Life Co. Ltd.’s $5.7 billion acquisition of Protective Life was among the largest recent deals in the life sector.
Sumitomo said in a statement it plans to retain Symetra’s management team, augmented by some of its employees and officers, including directors, “in order to establish strong communications.” Thomas Marra has been Symetra’s president and chief executive officer since 2010.
Symetra reported second-quarter net income of $31.2 million, less than half of the $71.5 million it posted in the prior-year quarter.
Sumitomo reported increases in insurance premiums and other income for the fiscal year that ended March 31, as well as net surplus of $1 billion. In May, Marsh acquired Sumitomo Life Insurance Agency America Inc., an employee benefits brokerage and consulting subsidiary of Sumitomo (Best’s News Service, May 13, 2015).
Sumitomo said in a statement the Symetra deal is part of a medium-term business plan to allocate resources to areas with growth potential, such as overseas business opportunities. The company said it wants to diversify its “earnings foundation and achieve sustainable growth in enterprise value in the long term.”
Sumitomo said Symetra shares a management philosophy that includes “steady profitability based on a balanced business portfolio” and “high growth potential” backed by experienced leadership. It anticipates that the deal could close in 2016 late in the first quarter or early in the second quarter.
Seewon Oh, A.M. Best Asia-Pacific associate director of analytics, told Best’s News Service earlier this month the growth outlook in the U.S. market remains strong when compared to Japan, which is facing demographic changes. Oh said Japanese insurers are drawn to the U.S. market because of the many medium- to large-size life insurance companies with specialized areas of business (Best’s News Service, Aug. 4, 2015).
Swiss Re sigma had reported that in 2014 the two countries had the largest global life insurance markets, $528 billion in United States and $372 billion in Japan.
A.M. Best said on Aug. 11 that the Best’s Financial Strength Rating of A (Excellent) of the two domestic life/health insurance subsidiaries of Symetra – Symetra Life Insurance Co. and its subsidiary, First Symetra National Life Insurance Company of New York, were unchanged following the announcement.
Shares of Symetra Financial Corp. (NYSE: SYA) were trading the afternoon of Aug. 11 at $31.54, up 6.84% from the previous close.
(By Renée Kiriluk-Hill, associate editor, BestWeek: renee.kiriluk-hill@ambest.com)
