October 12, 2018
Ohio-based P&C carrier Cincinnati Financial is set to make its entry into Lloyd’s with its acquisition of Munich Re’s MSP Underwriting, which operates through Beaufort Underwriting Agency and Syndicate 318.
Under the terms of the transaction, Cincinnati will pay Munich Re a £102mn cash consideration for the global specialty underwriter, based on MSP Underwriting's projected net asset value at closing.
The transaction has been approved by Cincinnati's board of directors.
Based in London, MSP Underwriting operates through Beaufort Underwriting Agency Limited, which underwrites for Lloyd's Syndicate 318.
Following the completion of the deal, MSP Underwriting will continue to operate under its own brand and with its existing leadership team as a wholly-owned subsidiary of Cincinnati.
Specialising in global property and aviation business, MSF Pritchard Syndicate 318 reported gross written premiums of £153mn in 2017 and has booked an underwriting profit in 20 out of the last 24 years, Cincinnati said in a statetment.
Cincinnati said that it expects the acquisition to generate an attractive return over time and anticipates that the deal will be accretive to 2019 net income based on current assumptions.
Cincinnati Financial president and CEO Steven Johnston said:"Adding MSP Underwriting to the Cincinnati family brings experienced underwriters who we believe will open opportunities for us to support our agents in new geographies and lines of business.
“And, it complements our existing large commercial account, excess and surplus lines, high net worth personal lines and reinsurance assumed growth initiatives.”
"Munich Re is a long-time and valuable reinsurance partner. We are pleased to work with them through this transaction. MSP's size allows us to follow our proven strategy of building successful insurance businesses over time – just as we have with our excess and surplus lines subsidiary and our reinsurance assumed business,” he added.
Peter Röder, member of the board of management of Munich Re commented:“Cincinnati Financial is perfectly suited for enhancing MSP Underwriting’s business and we are looking forward to seeing the company prosper within Cincinnati Financial.”
“After the sale, Munich Re will have a focused and less complex set-up in order to drive profitable growth within the Lloyd’s market, instead of running two platforms in parallel. We remain committed to the Lloyd’s market, and will continue to grow the business within Munich Re Syndicate Ltd.”
The deal is slated to close in the first quarter of 2019, subject to regulatory approval.