Sumitomo Life Seeks U.S. Platform through Symetra Financial Acquisition

Symetra’s largest shareholders, White Mountains and Berkshire Hathaway, representing approximately 18 and 17 percent ownership of common shares, respectively, have agreed to vote in favor of the transaction.

(Bellevue, Washington, home of Symetra Financial. Photo credit: Marv Heston/Visit Bellevue Washington.)

Sumitomo Life Insurance (Tokyo and Osaka) has entered into a definitive merger agreement with Symetra Financial (Bellevue, Wash.), whereby Sumitomo life will acquire all outstanding shares of Symetra.  Sumitomo Life intends to make Symetra its U.S. platform—the second Japanese company within the last month to announce its intention to acquire a Pacific Northwest-based life insurance carrier to serve as the hub of U.S. operations.

Symetra, founded in 1957, provides employee benefits, annuities and life insurance through a national network of benefits consultants, financial institutions and independent agents and advisors. As of June 30, 2015, Symetra had $34 billion in assets, approximately 1.7 million customers, and 1,400 employees nationwide. Sumitomo Life, founded in 1907, is a leading life insurer in Japan with multi-channel, multi-product life insurance businesses. Sumitomo Life provides traditional mortality life insurance, nursing care, medical care and retirement plans through sales representatives, insurance outlets, the Internet and bancassurance. As of March 31, 2015, Sumitomo Life had $229 billion in assets, approximately 6.8 million customers and 42,000 employees.

Shared Management Philosophy

Masahiro Hashimoto, president and CEO, Sumitomo Life Insurance Company.

Masahiro Hashimoto, president and CEO, Sumitomo Life Insurance Company.

“We are enthusiastic about the opportunity to acquire Symetra’s dynamic business and believe that a transaction will be mutually beneficial and will create significant value for both Symetra and Sumitomo Life,” comments Masahiro Hashimoto, president and CEO, Sumitomo Life Insurance Company. “Both companies share a management philosophy that strives to provide customers with valuable insurance solutions and offer the highest quality of service. We are confident that this transaction will further enhance our financial and earnings foundation by expanding the size of overseas revenues, diversifying the revenue base and thereby enabling us to build a well-balanced overseas business portfolio across Asia and the United States.”

(Related: Meiji Yasuda Life Insurance to Acquire The Standard)

Symetra’s President and Chief Executive Officer, Thomas M. Marra, and the current management team will continue to lead the business from Symetra’s headquarters in Bellevue. Symetra will maintain its current brand, employees, distribution channels and product mix. A joint press release from the two firms asserts that Symetra’s expertise in and commitment to the retirement, employee benefits and life insurance markets, coupled with Sumitomo Life’s resources, will create a stronger and more diversified combined company with total assets of $250 billion.

Warren Buffet, chairman and CEO, Berkshire Hathaway.

Warren Buffet, chairman and CEO, Berkshire Hathaway.

Symetra’s largest shareholders, White Mountains and Berkshire Hathaway, representing approximately 18% and 17% ownership of common shares, respectively, have agreed to vote in favor of the transaction.

“Tom and his management team have done a good job running the company and have executed a great deal for shareholders. I wish them the best for future success under their new owners,” comments Warren Buffet, chairman and CEO, Berkshire Hathaway.

Terms of Transaction

By the terms of the deal, Symetra shareholders will receive $32.00 per share in cash at closing, plus a previously announced special dividend of $0.50 per share in cash, which is payable on August 28, 2015 to Symetra shareholders of record as of August 10, 2015. The amount of the special dividend was established in connection with the determination of the total combined transaction consideration. The total combined transaction consideration of $32.50 per share is approximately $3.8 billion in aggregate and represents a 32% premium over Symetra’s average stock price of $24.64 for the 30 days ending August 5, 2015.

The transaction, which was unanimously approved by Symetra’s board of directors, is expected to close late in the first quarter or early in the second quarter of 2016.

Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at [email protected] or (503) 936-2803.

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