Japan’s Meiji Pays Up Big for StanCorp — Overheard

Meiji Yasuda Life Insurance Company has entered into a definitive agreement to acquire StanCorp Financial Group (The Standard). Meiji Yasuda agreed to pay $115 a share for Portland, Oregon-based StanCorp, compared with Thursday’s closing price of $76.69.

Its local competitors are Tokio Marine Holdings, Dai-ichi Life Insurance Co and Nippon Life Insurance Co.

Japan’s demographics imply that “for those who keep at residence, you’re a shrinking firm”. The Company’s insurance businesses offer group and individual disability insurance, group life and accidental death and dismemberment (AD&D) insurance, group dental and group vision insurance, and absence management services. It also offers annuities. During the same quarter last year, the company posted $0.96 earnings per share. StanCorp CEO Greg Ness said in a statement that “While we were not looking for a buyer, Meiji Yasuda’s proposal presented a tremendous opportunity to create value for all of our stakeholders – providing a substantial cash premium to our shareholders while enabling us to maintain our current operations and valued employees”.

Meiiji Yasuda said it will finance the deal with cash and equivalents.

“The size and profit of our overseas insurance business will jump with this purchase”, the company said. Both boards have already approved the terms. Torchmark Corp. rose 2.9 percent and Primerica Inc. climbed 1.1 percent. The parties expect to complete the transaction in the first quarter of calendar year 2016.

“Particularly for large Japanese life insurers, the total amount of insurance in force is declining, so bringing a quality overseas insurer under the umbrella is a good way to secure stable revenues and diversify portfolios”, Tokyo-based Standard & Poor’s credit analyst Reina Tanaka said.

Meiji Yasuda’s acquisition of StanCorp and its subsidiaries comes as the $300 billion Japanese financial firm expands globally.