Munich Re's Loss-Making Cyber Purchase Might be Overvalued

Dow Jones08-20 19:00

1100 GMT - Munich Re is paying a generous price for U.S.-based cyber insurance company At-Bay and investors have mixed feelings about the deal, Jefferies' Philip Kett and Derald Goh write. The German reinsurance company said Wednesday that it was buying At-Bay for $575 million. The company diversifying makes sense, Jefferies says, but notes contrary feedback from investors. "Some investors are of the view that management ought to return more capital via the buyback to help achieve the [earnings per share] target, instead of over-paying for M&A," Jefferies writes. The At-Bay business is loss-making and isn't expected to break-even until 2029-30, the analysts note. The company is also operating in a weakening cyber insurance market, meaning the valuation could appear more generous, the analysts add. Shares are down 1.0%, and are 9.4% lower over the year-to-date.

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