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Tokio Marine continues global expansion with Philadelphia move

The expansive Japanese insurer Tokio Marine & Nichido Fire Insurance Co’s acquisition of non-life insurer Philadelphia Consolidated Holding Corp (PCHC) will help the company to strengthen its overseas property and casualty (P&C) businesses, according to ratings agency Moody’s Investors Service.

The $4.7bn deal to buy non-life insurer PCHC, in what would be the largest US acquisition by a Japanese financial firm, was announced earlier this month.

Moody’s said it affirmed Tokio Marine’s Aa2 insurance financial strength rating with a stable outlook following the announcement.

It said: “PCHC has a good financial profile and the acquisition is not anticipated to pressure Tokio Marine & Nichido’s own financial profile, though the acquisition will be partly funded by the issuance of new debt.”

It added that this acquisition will help Tokio Marine & Nichido increase its geographical diversification.

While synergies may result from the coordination between PCHC and some of Tokio Marine & Nichido’s global insurance operations, Moody’s said it does not assume such benefits will be significant in the near term.

Tokio Marine – part of the Millea Group and Japan’s largest non-life insurer – said it will pay $61.5 per PCHC share, representing a 73 percent premium to its closing price yesterday, after entering into a definitive agreement with the US company.

In a statement, Tokio Marine said the deal marks its “significant expansion” into the US, and “effectively complements” its recent growth initiatives.

Earlier this year the Japanese insurer – which currently generates 80 percent of its profits from its domestic market – closed a surprise £442.2mn buyout of Lloyd’s insurer Kiln plc.

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