When Tokio Marine Holdings Inc. announced it would acquire Philadelphia Consolidated Holding Corp. for $4.8 billion in July 2008—near the height of the global economic meltdown—market-watchers were impressed but not overly surprised at the hefty price tag. Some four years on, many agree, the deal still looks smart.
Robert Farnam, senior vice president of equity research with Keefe, Bruyette & Woods, says that Philadelphia had been shopping itself around for a while prior to the sale.
“It was fairly expensive on a price-to-book basis, but the company was doing a lot of things right, and I had an ‘out-perform’ on it at the time,” Farnam recalls. “Tokio paid a lot for it up front, but they had a long-term view.”
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