Deal said to be worth $3.1bn
The acquisition of Privilege Underwriters Inc and its subsidiaries, which are collectively known as the Pure Group, has recently been completed by Tokio Marine Holdings, the leading international insurance business. Tokio paid $3.1bn to buy the Pure Group.
US-based Pure Group is a specialist insurer of high net worth clients and their assets, including yachts and superyachts. The takeover by Tokio Marine was first announced last October and to implement the deal Tokio Marine used its wholly-owned subsidiary, HCC Insurance Holdings, Inc. The first financial results of the Pure Group post the acquisition will be consolidated into the financial statements of Tokio Marine Holdings from the first quarter of fiscal year 2020 onwards.
Tokio Marine acquired 100% of Privilege Underwriters Inc’s shares from existing shareholders which included Stone Point (51%), KKR (34%), AXA XL (10%), Pure management and others (5%). Pure Group reported fee income of $229m in 2018; a pre-tax profit of $73m and premiums under management totalled $963m.
Pure Group uses Privilege Underwriters Reciprocal Exchange to write its insurance contracts, but policyholders actually own the reciprocal exchange, so it is not part of the acquisition. The exchange places most of its risk with the reinsurance market and also shares it with the insurance subsidiary of Pure Group. The capital of the reciprocal exchange is in the main contributed by the policyholders.
The major business of Pure Group is concerned with the management of the reciprocal exchange covering areas such as claims and underwriting. The income that Pure Group receives for these management services makes up most of its revenues plus other contributions from brokerage, claim services and income or losses from the reinsurance activities in which the insurance subsidiary gains reinsurance premium from the exchange.
Pure Group’s founder and CEO, Ross Buchmueller, as well as all the group’s key management team will continue under the Tokio Marine ownership.
In a statement, Tokio Marine indicated that the acquisition of Pure will allow it to further expand and diversify its international business in both scale and profit, adding that there was only a small overlap with the majority of Pure’s business being very complementary to that of Tokio Marine.