Mapfre’s $1.54 billion takeover of Security Insurance coverage Group has cleared two of its final three hurdles. Solely regulators now stand between the deal and shutting.
The Spanish insurer raised €1 billion in two bond points: a three-year €500 million senior tranche priced at 3.875%, and a €500 million Tier 2 subordinated tranche maturing in 2041 with a 4.875% coupon.
The problems drew mixed demand of greater than €5.7 billion from over 150 institutional buyers, 5 and 6.4 occasions the quantities issued, which allowed Mapfre to tighten pricing by greater than 30 and 35 foundation factors respectively. It’s Mapfre’s third journey to the debt markets this yr, after a €1 billion senior challenge in January and a €500 million Tier 2 bond in June.
The financing follows a vote on November 3 during which Security shareholders permitted the merger, with greater than 11.29 million shares voting for it and fewer than 13,000 towards. The deal nonetheless wants approval from the Massachusetts commissioner of insurance coverage and clearance below the Hart-Scott-Rodino antitrust ready interval. Mapfre expects it to shut within the first quarter of 2027.
What the settlement includes
Underneath the settlement introduced in July, a Mapfre USA subsidiary will merge with Security, which can grow to be a completely owned subsidiary of Mapfre USA and hold working below its personal identify. Security shareholders will obtain $105 a share in money, a 44% premium to the inventory’s value earlier than the announcement. Security writes personal passenger auto, householders and industrial auto in Massachusetts, Maine and New Hampshire. Mapfre already writes in Massachusetts via its Commerce Insurance coverage model, and says the mixed group will likely be New England’s largest householders and industrial auto insurer and second-largest author of personal passenger auto.
Mapfre’s steadiness sheet helps the deal. It reported a Solvency II ratio of 208.8% on the finish of the primary half, and its US operation posted its best-ever nine-month outcome in October. Fitch charges the group A with a steady outlook, and S&P upgraded it to A this yr.
For unbiased brokers, distribution would be the largest change. Security works with about 800 unbiased brokers and Mapfre with about 3,000 within the area, as IB reported in September. Brokers who characterize each carriers will quickly place a lot of their Massachusetts e-book with a single group. Urge for food, fee phrases and contract continuity are the questions to lift earlier than closing.
