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(Reuters) — Property/casualty insurer Sompo Japan Nipponkoa Holdings Inc. said on Friday it has agreed to acquire a 7.8% stake in French reinsurer Scor S.E. and plans to raise it to at least 15%.
The Japanese company said it will acquire the 7.8% stake from Scor's largest shareholder, Swiss investment firm Patinex A.G. The stake is worth about 60 billion yen ($500 million), it said.
Scor welcomed the arrival of Sompo in its capital as a long-term shareholder, but said it had not been party to the transaction between the Japanese company and Patinex.
Sompo Japan said it plans to buy additional shares from the market and other major shareholders to bring its stake to 15% or more in the future.
"This holding has no impact on the strategic development of Scor, which actively continues to implement its strategic plan, 'Optimal Dynamics,' or on its corporate governance or management," Scor said in a statement.
Scor was not alone in not seeing the purchase coming. Many analysts had Scor to be one of the buyers in the consolidation underway in the sector until its CEO ruled that prospect out on Thursday.
"Although we remain convinced that M&A transactions will continue in the reinsurance and specialty lines space, we had previously believed that Scor was more likely to be an acquirer of businesses and in particular those with U.S. P&C exposure," RBC analysts said in a research note.
Presenting better-than-expected 2014 earnings on Thursday, Scor Chief Executive Denis Kessler said he felt no pressure to join merger activity in the sector, as it was already big enough.
The stake purchase was Sompo Japan's latest push in Europe after it agreed in December 2013 to buy Canopius Group Ltd., a privately held insurance and reinsurance group operating in the Lloyd's of London insurance market, for 99.2 billion yen ($825.8 million).
Rates decreased by an average 0.7% at the Jan. 1 reinsurance renewal, according to Scor Global P&C, the property and casualty reinsurance arm of Paris-based reinsurer Scor S.E.