Meiji Yasuda to buy US insurer StanCorp for US$5b

[TOKYO] Meiji Yasuda Life Insurance agreed to buy US insurer StanCorp Financial Group for about US$5 billion, joining Japanese insurers that are expanding abroad to counter the shrinking domestic market.

Meiji Yasuda will pay US$115 a share for the Portland, Oregon-based insurer, a 49.9 per cent premium on its one-month weighted-average share price, according to a statement.

Japanese insurers are looking for ways to spread risks and increase revenue overseas as an aging population saps demand for policies and natural disasters lead to higher payouts. Tokio Marine Holdings agreed to buy HCC Insurance Holdings for about US$7.5 billion last month. Dai-Ichi Life Insurance's paid about US$5.5 billion for Protective Life Corp. this year.

StanCorp was founded more than 100 years ago and sells a range of products that companies offer to their employees, like long-term disability and life insurance. It also offers annuities.

Its profit has climbed as it benefited from higher premiums in its employee-benefits unit and improvements in the individual-disability business. The insurer said Thursday that net income rose 58 per cent to US$64.3 million in the second quarter from a year earlier.

The shares had rallied almost 10 per cent this year, before the acquisition announcement. That compares with a 1.2 per cent drop for the Bloomberg Industries North America Life Insurance Valuation Peers Index.

The deal with closely held Meiji Yasuda includes a 25-day "go-shop" period during which StanCorp can seek competing offers. If another bidder emerges with a better offer, there's a US$90 million break-up fee, according to the statement.

Goldman Sachs Group Inc. served as StanCorp's financial adviser. It got legal advice from Debevoise & Plimpton. Morgan Stanley gave the buyer financial advice, while Baker & McKenzie LLP acted as its legal counsel.

BLOOMBERG