Cincinnati Financial to Acquire MSP Underwriting
Cincinnati Financial announced that it has signed a definitive agreement to acquire MSP Underwriting Limited, a global specialty underwriter and Munich Re subsidiary, in an all-cash transaction for £102 million, based on MSP Underwriting’s projected net asset value at closing. The transaction has been approved by Cincinnati’s board of directors and is expected to close in the first quarter of 2019, pending regulatory approvals and other customary closing conditions. As a wholly owned subsidiary of Cincinnati Financial, MSP Underwriting will continue to operate under its own brand and with its existing leadership team.
“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,” commented Steven J. Johnston, president and chief executive officer.
Based in London, MSP Underwriting operates through Beaufort Underwriting Agency Limited, which underwrites for Lloyd’s Syndicate 318. The Syndicate wrote approximately £153 million in 2017 annual gross written premiums. An experienced property and aviation underwriter, MSP Underwriting has a long track record of success, earning an underwriting profit in 20 out of the last 24 years. Future business plans call for targeted expansion into new classes of business.
Johnston continued, “Munich Re is a longtime 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.”
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.”
Cincinnati expects the acquisition to generate an attractive return over time. The impact of the acquisition on Cincinnati’s consolidated 2019 and 2020 financial results will depend on a variety of factors, including timing of the close, valuation of intangible assets and transaction costs. Based on current assumptions, the company expects the acquisition to be accretive to 2019 net income.
