Cincinnati Financial Corp. signed a definitive agreement to acquire London-based MSP Underwriting Ltd. from Munich Re Co., in an all-cash transaction for £102 million ($134.5 million), based on MSP Underwriting's projected net asset value at closing.

Cincinnati's board approved the deal, which is expected to close in the first quarter of 2019, pending regulatory approvals and other customary closing conditions. As a wholly owned subsidiary of Cincinnati Financial, MSP Underwriting will continue to operate under its own brand and with its existing leadership team.

Cincinnati expects the acquisition to generate an attractive return over time. The deal's effect on Cincinnati's consolidated 2019 and 2020 financial results will depend on a variety of factors, including timing of the close, valuation of intangible assets and transaction costs. Based on current assumptions, the company expects the acquisition to be accretive to 2019 net income.

MSP Underwriting operates through Beaufort Underwriting Agency Ltd., which underwrites for Lloyd's of London Syndicate 318. The syndicate wrote about £153 million of gross written premiums in 2017 and specializes in property and aviation insurance, with plans calling for targeted expansion into new classes of business.

Munich Re has operated at Lloyd's through both Syndicate 318 and Syndicate 457, which is managed by Munich Re Syndicate Ltd. Peter Röder, Munich Re management board member for global clients and North America, said the sale of MSP would give it a "focused and less complex set-up" to drive profitable growth in the Lloyd's market.

"We remain committed to the Lloyd's market, and will continue to grow the business within Munich Re Syndicate Ltd.," he added.

JLT Capital Markets Inc. acted as financial adviser and Sidley Austin LLP acted as legal adviser to Cincinnati Financial. Fenchurch Advisory Partners acted as financial adviser and Norton Rose Fulbright acted as legal adviser to Munich Re.