Tokio Marine : Agreement to acquire Standard Security Life Insurance Company of New York through U.S. subsidiary Reliance Standard Life Insurance CompanyPDF

April 16, 2021

Tokio Marine Holdings, Inc.

Agreement to acquire Standard Security Life Insurance Company of New York

through U.S. subsidiary Reliance Standard Life Insurance Company

Tokio Marine Holdings, Inc. (President and Group CEO: Satoru Komiya, the "Company") today announced the signing of a purchase agreement to acquire 100% of the outstanding shares of Standard Security Life Insurance Company of New York ("SSL") through its wholly owned subsidiary, Reliance Standard Life Insurance Company ("RSL") *1 for US$180 million (JPY 19.8 billion*2).

The transaction is expected to close during the third quarter (July to September) of 2021 subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals.

*1: RSL: subsidiary wholly owned by Delphi Financial Group

*2: 1US$ = JPY110

1. Background of the acquisition

1. As a global insurer, the Company has been focusing on expanding scale and profitability of its international business as the key growth driver of the overall group. The Company has been pursuing organic growth and strategic M&A initiatives in both developed and emerging markets in order to capture growth opportunities in the global insurance market and to further diversify the business portfolio.
2. In developed markets, the Company has a strong track record of successful acquisitions, which has allowed the Company to build a diversified portfolio especially focused on specialty primary insurance businesses. The Company has taken a further step by acquiring Privilege Underwriters, Inc., which provides insurance products and services with a focus on the High Net Worth, in February, 2020. The Company has also been seeking bolt-on acquisition opportunities to further strengthen current operations and expand profitability. Investing in growth opportunities in emerging markets has also been a focus, as seen in the establishment of the insurance joint venture with a state-owned banking group in Brazil in January 2021.
3. SSL primarily provides insurance coverage with respect to statutorily required disability benefit law ("DBL") and paid family leave ("PFL"). Although SSL's current operations are focused in New York State, an increasing number of states have enacted or are considering PFL laws with more states expected to follow*3. SSL's niche has primarily been in the small client segment (i.e., companies with fewer than 50 employees) and its efficient operations enables SSL to run with a lower expense ratio as compared to its peers.
4. We believe that, through acquiring SSL's operational excellence and expertise in the PFL insurance space, RSL will be able to strengthen its profitability and competitiveness in this space while growing market share.

*3 In the US, legislation around PFL has become a focus in recent years as an agenda to improve work environment, especially for women and the elderly, and secure the workforce. Recently the momentum has become even stronger and PFL insurance is considered to be one of the promising markets in terms of future growth under President Biden, particularly in the wake of the pandemic.

2. Strategic rationale of the acquisition

1. Acquire stable underwriting profit and scale
   SSL's combined ratio is approximately 90% or less, and RSL is expected to secure stable underwriting profit through its acquisition. In addition, the combination of RSL and SSL will create a leading insurer in the New York State DBL and PFL insurance market.
2. Strengthen platform in the expanding PFL insurance market
   SSL's strength in the small client segment and competitive expense base will enable RSL, which has strengths in the larger client segment, to better position itself to take advantage of growth potential in the PFL insurance market, which typically impacts companies with as few as one employee in an affected state.
3. Generate cross-selling opportunities to SSL customers
   The Company expects to take advantage of synergies such as cross-selling of RSL Employee Benefit insurance products to existing SSL clients (approximately 60,000 companies and 1 million employees).

3. Overview of SSL

(1) Name of SSL	Standard Security Life Insurance Company of New York
(2) Year of establishment	1957
(3)	Head office	New York City, New York
(4)	Major insurance products	PFL insurance, DBL insurance
(5)	Gross written premium*4	USD 122 Million (JPY 13.4 Billion*2)
(6)	Net profit after tax*4	USD 13 Million (JPY 1.4 Billion*2)
(7)	Net asset*4	USD 65 Million (JPY 7.1 Billion*2)
(8) Shareholder	100% owned by Independence Holding Company Group
(9)	Number of employees	Approximately 70 employees
*4: Figures are that of FY2020

4. Overview of RSL

(1) Company name	Reliance Standard Life Insurance Company
(2)	Year of establishment	1907
(3)	Head office	Schaumburg, Illinois
(4)	Nature of business	Employee benefit insurance business, Fixed and
		Indexed annuity business
(5)	Gross written premium*5	USD 1,374 Million (JPY 151.1 Billion*2)

(6)	Net profit after tax*5	USD 362 Million (JPY 39.8 Billion*2)
(7)	Net asset*5	USD 2,559 Million (JPY 281.5 Billion*2)
(8)	Shareholder	100% owned by Delphi Financial Group which is a
		wholly owned subsidiary of the Company
(9)	Number of employees	Approximately 1,110 employees
*5: Figures are that of FY2019