Back in July this year, Tokio Marine Holdings (8766 JP) was reportedly running a ruler over Insurance Australia (IAG AU) or Suncorp (SUN AU)
As discussed in IAG AU: Greensill Settlement Removes Overhang. Tokio Marine Will Take Note, IAG is now cleaner after settling the Greensill litigation.
That leaves the A$1.4bn acquisition of RAC WA, which looks set to be dinged by the ACCC. IAG could then tap the Australian Competition Tribunal to over throw the decision.
Conclusions First
Neither IAG nor Suncorp are trading cheap.
Tokio Marine does have a history of buying non-Aussie ops from IAG. And Berkshire is a shareholder in both Tokio Marine and IAG
But how much of a premium is Tokio Marine willing to outlay to secure a toehold in Australia’s general insurance space?
I’m not convinced at these levels.
I still tilt positive on IAG. But it’s not a strong conviction trade.