Japans Dai-ichi to Acquire American Peer Protective Life in USD 5.7 billion deal

Published By : 04 Jun 2014 | Published By : QYRESEARCH

Japan-based Dai-ichi Life Insurance Co. announced this week that its talks for the purchase of American peer Protective Life have reached a consensus. Dai-ichi will buy the latter in a USD 5.7 billion deal. This marks the largest ever acquisition by a Japanese insurer. Dai-ichi has been aggressively working on strategies to mitigate the impact of weak prospects in its home market by expanding overseas. Dai-ichi, which ranks as the second-largest life insurer in Japan’s private insurance sector, has said that it plans to issue new shares to the tune of approximately 250 billion yen towards the purchase of Protective Life. This deal was one of the most widely anticipated ones in the insurance industry. The Japanese insurance major will continue to retain current management operating from Birmingham, Alabama. 

In the face of Japan’s rapidly aging population, the Japanese insurance sector has suffered a setback. And, it’s not just Dai-ichi. Other insurers in Japan have also been actively purchasing assets in dynamic markets in Southeast Asia and the United States. The insurance market in the U.S. is the biggest, but the largest insurance policy demand comes from Southeast Asia. This demand is only expected to increase over the next few years thanks to a rapid rise in the middle class. 

As per the terms of the agreement, USD 70 dollar per share will be paid by Dai-ichi towards acquiring 100% of Protective Life. This translates into a 35% premium on the average share price recorded by Protective over the last month. The deal is expected to close by January 2015.
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