Cincinnati Financial to Acquire MSP Underwriting Limited from Munich Re

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.

Source: Cincinnati Financial | Published on October 12, 2018

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"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. 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.

Johnston continued, "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."

Peter Röder, member of the Board of Management of Munich Re, commented, "Cincinnati Financial is perfectly suited for enhancing MSP Underwriting's business and we are looking forward to seeing the company prosper within Cincinnati Financial. After the sale, Munich Re will have a focused and less complex set-up in order to drive profitable growth within the Lloyd's market, instead of running two platforms in parallel. We remain committed to the Lloyd's market, and will continue to grow the business within Munich Re Syndicate Ltd."

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.

Cincinnati Financial will host a webcast and conference call on Friday, October 12, 2018, at 9 a.m. ET to discuss the proposed transaction. Analysts following Cincinnati Financial can access the conference call by calling 800-374-0064. The live listen-only webcast is open to the public and can be accessed via the Investor Relations section of cinfin.com.

JLT Capital Markets Inc. acted as financial advisor and Sidley Austin LLP acted as legal advisor to Cincinnati Financial Corporation. Fenchurch Advisory Partners acted as financial advisor and Norton Rose Fulbright acted as legal advisor to Munich Re.

Additional details about the transaction can be found on Cincinnati's website, www.cinfin.com/investors, including a presentation deck that summarizes key financial terms and expected benefits of the acquisition.

About Cincinnati Financial
Cincinnati Financial Corporation offers business, home and auto insurance, our main business, through The Cincinnati Insurance Company and its two standard market property casualty companies. The same local independent insurance agencies that market those policies may offer products of our other subsidiaries, including life and disability income insurance, fixed annuities and surplus lines property and casualty insurance. For additional information about the company, please visit cinfin.com.