Symetra Financial To Be Acquired By Japan's Sumitomo Life For About $3.8 Bln

(RTTNews) - Life insurer Symetra Financial Corp. (SYA) said Tuesday that it has agreed to be acquired by Japan's Sumitomo Life Insurance Co. for about $3.8 billion in cash.

The acquisition of Symetra will enable Sumitomo Life to gain a foothold in the U.S., the world's largest insurance market, where the Japanese company does not currently have a material operational presence. Shares of Symetra are gaining almost 7 percent in pre-market activity.

Under the terms of the deal, Symetra shareholders will receive $32 per share in cash at closing, plus a previously announced special dividend of $0.50 per share in cash. The special dividend is payable on August 28, 2015 to Symetra shareholders on record August 10, 2015.

Bellevue, Washington-based Symetra, founded in 1957, provides employee benefits, annuities and life insurance through a national network of benefits consultants, financial institutions, and independent agents as well as advisors. As of June 30, 2015, Symetra had $34 billion in assets, about 1.7 million customers, and 1,400 employees nationwide.

Sumitomo Life, founded in 1907, is Japan's fourth-largest life insurer by assets, 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, the company had $229 billion in assets, about 6.8 million customers and 42,000 employees.

Symetra noted that it's expertise in 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.

Symetra will operate as a wholly owned subsidiary of Sumitomo Life and become Sumitomo Life's platform in the U.S.

Symetra's President and Chief Executive Officer, Thomas Marra, and the current management team will continue to lead the business from the company's headquarters in Bellevue. The company will retain its current brand, employees, distribution channels and product mix.

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

The transaction was unanimously approved by Symetra's board of directors and is subject to the approval of the company's shareholders. The deal is expected to close late in the first quarter or early in the second quarter of 2016.

For Symetra, Morgan Stanley & Co. LLC is acting as its financial advisor, while Cravath, Swaine & Moore LLP is acting as its legal advisor.

Major Japanese insurance companies are scouting for acquisitions abroad, amid weak growth prospects in their domestic market due to a shrinking and rapidly aging population.

In late July, Japan-based Meiji Yasuda Life Insurance Co. agreed to buy U.S.-based StanCorp Financial Group Inc. (SFG) for about $5 billion.

In February, another Japanese insurer Dai-ichi Life Insurance Co. Ltd. completed a $5.6 billion acquisition of mid-sized U.S. life insurer Protective Life Corp. for about $5.6 billion.

Japanese insurance holding company Tokyo Marine Holdings Inc. (TKOMF, TKOMY) agreed in June to buy U.S.-based HCC Insurance Holdings Inc. (HCC) for $7.5 billion. Another Japanese insurer Nippon Life Insurance has also said it is considering overseas acquisitions.

SYA closed Monday's trading at $29.52. In Tuesday's pre-market activity, the stock is up $2.03 or 6.88 percent to $31.55.