By Kosaku Narioka
Tokio Marine Holdings shares were indicated sharply higher following Berkshire Hathaway's plan to acquire a 2.5% stake for $1.8 billion as part of a newly formed strategic partnership.
Shares were recently indicated 17% higher on Tuesday as buy orders overwhelmed sell orders at the daily limit of 6,857 yen, equivalent to $43.28. No shares changed hands.
Tokio Marine said after Monday's market close that it would sell treasury shares to National Indemnity, Berkshire Hathaway's core reinsurance unit, and that the partnership would include collaboration in reinsurance and potential acquisitions.
The Japanese insurance giant said it would buy back shares by using the funds raised to prevent dilution for existing shareholders. The insurer added that National Indemnity wouldn't acquire more than a 9.9% stake without prior approval from Tokio Marine's board.
Tokio Marine, founded in 1879, operates in several dozen countries worldwide. The company said the tie-up would strengthen earnings stability by mitigating underwriting volatility, particularly amid increasingly severe natural catastrophe risks.
The partnership will expand Tokio Marine's long-term investor base as it has been unwinding cross-shareholdings with clients and other business partners under pressure from the Japanese government. The insurer said the Berkshire Hathaway unit would exercise its voting rights in accordance with Tokio Marine's recommendations.
The Japanese company also said the partnership would combine Tokio Marine's M&A execution capabilities with National Indemnity's capital strength to access high-quality growth opportunities.
Tokio Marine Chief Executive Masahiro Koike said in an interview late last year that the company was testing the concept of combining insurance with noninsurance risk mitigation services in Japan and would bring the idea overseas if it is successful. In line with this strategy, he said the company was actively seeking to acquire expertise in cyberrisk mitigation.
Write to Kosaku Narioka at kosaku.narioka@wsj.com
(END) Dow Jones Newswires
03-23-26 2145ET
