Signage for Tokio Marine &Nichido Fire Insurance Co. is displayed outside the company'sheadquarters building in Tokyo, Japan, on Friday, July 17, 2015.(Photo: Kiyoshi Ota/Bloomberg)

Continuing its goal to pursue business opportunities on foreignsoil, Tokio Marine announced that it has agreed to purchasePrivilege Underwriters, Inc. (PUI) for $3.1 billion from investorsled by Stone Point Capital and KKR. PUI, which does businessthrough the PURE Group of Insurance Companies (PURE Group),includes several business entities dedicated to serving the needsof high-net-worth clients, including PURE Risk Management, PUREInsurance Company, PURE Programs, and Haven Art Group. The deal isexpected to close in the first quarter of 2020.

The $3.1 billion price-tag is 33-times PURE Group's forecastprofit for 2020; however, Tokio Marine's Chief Executive SatoruKomiya said in a news conference, "We are paying for PURE's big potential growth." Following the acquisition, AM Bestplaced PURE Group's financial strength and credit rating underreview, with "positive implications" considering Tokio Marine'ssuccessful track record with past dealings.

Investing overseas

Earlier this year, Komiya explained the possibility of up-coming large-scale acquisitions in the U.S.and Europe, Bloomberg reported, which has come to fruition with thePURE deal. The transaction marks Tokio Marine's fourth sizableacquisition in the U.S. in 11 years, not counting its most recentU.S. acquisition of cyber insurance specialist NAS InsuranceServices in April 2019. Tokio Marine's last big U.S.acquisition — Houston-based HCC Insurance Holdings —closed at $7.5 billion in 2015.

In total, the Japan-based insurer has spent more than $20billion on large overseas acquisitions in just over a decade.

"The U.S. market is huge, and it is expected to grow steadily,"said Komiya. "Also, the market is transparent."

In June 2019, Bloomberg also reported that overseas businessesaccounted for nearly half of Tokio Marine's profits, mostly fromthe U.S, and that the company intended to place more focus onopportunities in emerging Asian markets, such as its deal to buythe Thai and Indonesian businesses of Sydney-based InsuranceAustralia Group Ltd. for about A$525 million in 2018.

"We have [a] group companies in Southeast Asia, but they'resmall," Komiya said in a June interview. "If we have a chance tomake a further leap in the Philippines, Indonesia, and Malaysia,we'd like to expand our business."

Tokio Marine's move to buy PURE is part of a growing movement ofJapanese financial firms looking abroad for growth opportunitiesamid an aging and shrinking population, which has limited domesticbusiness prospects, Reuters reports.

It's also continuing a trend within the insuranceM&A market; insurance agency M&A activity broke records in first-half2019 when 328 deals were announced, according to OPTIS Partners.Clyde & Co.'s report, "Insurance Growth Report 2019 –Mid-year update," explains that global insurance industry M&Aactivity rose 13.2% in the first half of 2019 compared to the sameperiod in 2018, as "cross-border M&A activity continued apacein [first-half] 2019 with 63 deals representing 28% of the globaltotal as reinsurers look to extend their reach into newterritories."

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