Munich Re sells Lloyd's subsidiary for £102m to Cincinnati

Cincinnati Financial Corporation is acquiring Munich Re subsidiary MSP Underwriting in an all-cash transaction of £102 million.

Based in London, specialty underwriter MSP operates through Beaufort Underwriting Agency, which underwrites for Lloyd's Syndicate 318. The Syndicate wrote approximately £153 million in 2017 annual gross written premiums.

Peter Röder, member of the board of management of Munich Re, said: "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."

The transaction has been approved by Cincinnati's board of directors and is expected to close in the first quarter of 2019. The total deal value of £102 million is based on MSP's projected net asset value at closing.

Upon completion, MSP will operate as a wholly owned subsidiary of Cincinnati, but will continue to operate under its own brand and with its existing leadership team. MSP said its future business plans include expansion into new classes of business.

Cincinnati said it expects the acquisition to be accretive to its 2019 net income, based on the current assumptions.

"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," said Steven Johnston, Cincinnati president and chief executive officer. "And, it complements our existing large commercial account, excess and surplus lines, high net worth personal lines and reinsurance assumed growth initiatives."

Johnston added: "Munich Re is a long-time 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."