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(Name of Registrant as Specified In Its Charter)
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(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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o Fee paid previously with preliminary materials.
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o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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The additional security and support of a highly rated, leading global insurer
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An even stronger capital base
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Access to additional products and capabilities
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1.
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What has been announced today?
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Today, Tokio Marine Holdings, Inc. (“Tokio Marine”) announced a definitive agreement under which it will acquire all outstanding Class A shares of Delphi Financial Group, Inc. (“Delphi”), for $43.875 per share in cash and all outstanding Class B shares for $52.875 per share in cash. In addition, all Delphi shareholders will receive $1.00 in cash in a one-time special dividend from Delphi payable shortly after closing for each share of stock they own. Delphi will also continue to declare and pay quarterly dividends in the normal course until the transaction closes. The total transaction value is approximately $2.7 billion. The transaction is expected to close in the second quarter of 2012.
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This transaction represents a great opportunity for both companies. Delphi and its subsidiaries are well positioned to benefit from Tokio Marine’s financial strength and international market knowledge, to leverage and partner with Tokio Marine’s existing U.S. operations, particularly Philadelphia Consolidated (“PHLY”), and to expand and diversify the revenues and capabilities of Tokio Marine.
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2.
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Who is Tokio Marine Holdings?
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Tokio Marine was founded in 1879 and is the oldest and largest P&C insurer operating in Japan. It is a publicly traded company on the Tokyo and Osaka exchanges with a ticker symbol of TKOMY. Tokio Marine’s website is http://www.tokiomarinehd.com/en/index.html. It has more than $200 billion in assets and $35 billion of equity, and wrote over $30 billion of direct written premiums in its last fiscal year ended April 1, 2011. Tokio Marine has a global network of offices operating in 39 countries around the world.
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Tokio Marine’s primary insurance subsidiaries enjoy an A.M. Best rating of A++, putting them in the highest tier of companies in the industry. Other rating agencies, including Moody’s, S&P and Fitch, also assign Tokio Marine’s subsidiaries very high financial strength ratings. Click here to see a listing of ratings: http://ir.tokiomarinehd.com/en/RatingInfo.html.
Tokio Marine conducts business in the U.S. through Tokio Marine Management, Inc. (“TMM”) and PHLY. TMM is the management company for the U.S. insurance operations of Tokio Marine & Nichido Fire Insurance Co., Ltd. TMM offers comprehensive commercial property and casualty insurance products, including marine, property and commercial package insurance, mainly to large- and middle-market companies in a variety of industries, with $351 million in gross written premiums in 2010. PHLY offers specialty commercial property and casualty and professional liability insurance products tailored for focused niche markets, including human services organizations and public service organizations, with $2.1 billion in gross written premiums in 2010.
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3.
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Why does a deal between Delphi and Tokio Marine make sense?
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The deal creates significant value for our shareholders. In addition, our becoming part of the Tokio Marine group is exciting because it will leverage our underwriting and investment expertise and give us access to substantial resources to take advantage of acquisitions and other new business opportunities. Our expertise in the employee benefits, excess workers’ compensation, large casualty, treaty reinsurance, annuity and investment areas, coupled with Tokio Marine’s global resources, should allow the combined company to realize growth and profitability superior to what we could achieve on a stand-alone basis. For example, the higher ratings we expect will allow us to accelerate the growth of our annuity business as well as boost sales of our employee benefits and other products. Access to the client base of TMM and PHLY opens cross selling opportunities. The stronger capital base will enhance our ability to make acquisitions of blocks of business and complementary businesses, as well as to develop new products.
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4.
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Tokio Marine is a foreign company. What is its track record with acquisitions?
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Although headquartered in Tokyo, Japan, Tokio Marine is very familiar with the U.S. insurance market as it currently conducts a significant amount of U.S. business through its TMM and PHLY operations. Tokio Marine has an excellent track record of completing acquisitions without disruption to clients or employees. There are no changes anticipated in the way we do business. Delphi and Tokio Marine are committed to ensuring this is a smooth process and that business operations continue as normal.
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5.
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How will Delphi change now that it is owned by Tokio Marine?
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Tokio Marine has great respect for the Delphi culture and expects us to operate with a high degree of autonomy. There are virtually no overlaps in the businesses of Tokio Marine and Delphi, so today’s announcement means that we can continue to execute our current strategic plan with the confidence that comes from being part of a stronger international operation with multiple opportunities for expansion. The Delphi, Reliance Standard, Safety National and Matrix senior management teams will remain intact and are very supportive of this merger and the enhanced opportunities it brings.
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6.
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Are there any near-term changes planned in our operations?
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We do not anticipate changes in the way Delphi, Reliance Standard, Safety National or Matrix are operated as a result of this transaction. Tokio Marine has a track record of acquiring strong insurance companies and allowing them to continue to run with a high degree of autonomy, including Lloyd’s of London insurer Kiln Ltd. and PHLY in 2008.
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7.
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Is there a chance this transaction will not be completed?
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Although there is always a chance that a transaction of this type will not be completed, we anticipate a smooth path towards closing some time in the second quarter of 2012.
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8.
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When do you expect the deal will close?
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We expect the deal to close in the second quarter of 2012. The merger is subject to the approval of Delphi shareholders as well as various regulatory authorities in the U.S. and Japan.
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9.
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Why are we learning about this on the day of the announcement and not sooner?
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Today’s announcement is a material event for Delphi. As a public company, we are legally required to publicly disclose the agreement with Tokio Marine now that it has been signed, but were not able to do so until this point. From a regulatory standpoint, this was the earliest possible time at which we could communicate this news to you.
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10.
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How many positions are there that overlap between Delphi and Tokio Marine? Are there any redundancies?
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There is virtually no overlap between Delphi’s and Tokio Marine’s U.S. business lines, so we expect no job reductions in our operating companies following the transaction. We expect the transaction to create revenue enhancement and new product opportunities which will benefit our employees, partners and customers.
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11.
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Will we retain our company names and branding?
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We anticipate no significant changes in the way that our operating companies are run as a result of this transaction; therefore we will retain our existing names and branding.
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12.
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Will we be relocating?
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Our headquarters and offices will remain in their current locations.
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13.
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What is happening with the Delphi, Reliance Standard, Safety National and Matrix management teams? Will the management structure change? Who will run the businesses?
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The superior results that Delphi’s management and employees have produced are what prompted Tokio Marine’s interest in this acquisition, and Tokio Marine believes those management teams and employees are critical to Delphi’s continued successful performance as a member of the Tokio Marine group. It is Tokio Marine’s and our intention to retain the current management structure and we anticipate no change in the way the Company is run as a result of this transaction.
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14.
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How long will the integration process take?
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The integration process should be relatively short since we do not expect our operations to change in any significant respect. Our clients, agents and brokers should experience no disruption from the acquisition, as our personnel and operating procedures will not be changing. We believe our business partners will benefit from our becoming a stronger and more diversified company, with enhanced product and international capabilities, as a result of the transaction.
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