Tokio Marine Closes $3.1B Acquisition of PURE Group

February 10, 2020

Tokio Marine Holdings announced that it has completed the acquisition of Privilege Underwriters Inc. and its subsidiaries, known as PURE Group, which specializes in the U.S. high-net-worth insurance market.

The deal was announced last October. The acquisition price was $3.1 billion (approximately JPY 325.5B).

The deal was completed through Tokio Marine’s wholly owned subsidiary HCC Insurance Holdings Inc. The financial results of PURE Group will be consolidated into the financial statements of Tokio Marine Holdings from the first quarter of fiscal year 2020 onward.

Tokio Marine acquired 100 percent of Privilege Underwriters Inc.’s shares from existing shareholders that include Stone Point (51 percent), KKR (34 percent), AXA XL (10 percent), PURE management and others (5 percent).

For 2018, PURE reported fee income of $229 million, a before-tax profit of $73 million and $963 million premiums under management. Its business profile is composed of homeowners (57 percent), auto (23 percent), inland marine (9 percent) and other lines for high-net-worth clients.

White Plains, N.Y.-based PURE Group’s insurance contracts are written by the Privilege Underwriters Reciprocal Exchange. However, the reciprocal exchange is owned by policyholders and is not itself part of the acquisition. The exchange cedes the majority of its risk to the reinsurance market and also shares with the insurance subsidiary of PURE Group. The capital of the reciprocal exchange is primarily contributed by the policyholders.

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PURE Group had been on the Japanese company’s radar for more than a decade.

PURE Group’s major business is managing operations of the reciprocal exchange (including underwriting, claims and marketing). The management fees received in return for these services is the primary source of income for the PURE Group. PURE Group’s other income sources are fees from brokerage, fine arts claim services and income/losses from the reinsurance business in which the insurance subsidiary assumes reinsurance premium from the reciprocal exchange.

Ross Buchmueller, founder, president and CEO of PURE Group, and all key management will continue in their positions, according to the October announcement.

Tokio Marine said the deal will allow it to further expand and diversify its international business in both scale and profit. The insurer said there is limited overlap and that PURE’s business is highly complementary with its own.

The insurer said that it has plans to create synergies with PURE Group under its umbrella by providing reinsurance to PURE Group to increase its capacity and retain profit within Tokio Marine Group and cross-selling of specialty insurance products developed by its existing U.S. group companies to PURE Group customers.

Source: : Tokio Marine Holdings

*This story ran previously in our sister publication Insurance Journal.