Cincinnati Financial to acquire MSP Underwriting Limited from Munich Re
An experienced property and aviation underwriter, MSP Underwriting has a long track record of success.
Cincinnati Financial Corporation 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.
Experienced underwriters, new geographies & lines of business
“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.
Experienced property & aviation underwriter
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.
“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,” continued Johnston.
Cincinnati expects attractive returns over time
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.
Sidley Austin LLP acted as legal advisor to Cincinnati Financial Corporation in its acquisition of MSP Underwriting Limited.