Humania Withdrew from Genstar/Horizons DealBy Serge Therrien | September 12 2016 01:29PM
Humania Assurance considered acquiring Genstar Capital's 75% stake in Financial Horizons Group. However, in an interview with The Insurance and Investment Journal, CEO Richard Gagnon revealed that the insurer decided not to proceed.
"It is not a run-of-the-mill situation and it's a big transaction," explained Gagnon. "However, our decision not to proceed had more to do with the importance of staying focused on our game plan. Our business plan is locked-in tightly for the coming years. To move forward with this transaction, that would be to risk losing our focus."
Humania aims to increase its online presence
Mr. Gagnon noted that Humania aims to increase its online presence with products that are distributed by advisors. "There are always a thousand and one opportunities to be distracted in business," he commented. Given its vision, the CEO revealed that Humania did not even reach the point of analyzing the financial arrangements available for carrying out this kind of deal.
Humania has the necessary access to capital markets. It has links with Quebec's development capital organization, the Fonds de solidarité FTQ, which acquired a minority stake in its share capital in 2015.
Genstar Capital has decided to sell its stake
As we reported on Friday, private equity firm Genstar Capital has decided to sell its stake in the managing general agent Horizons Financial Group. According to sources close to the situation, Genstar currently owns 75% of the company’s share capital, with the remaining amount split between senior management. Genstar became a shareholder of Financial Horizons Group in 2010.
Neither Genstar Capital nor Financial Horizons Group wished to comment on the news. Applying the kind of sales ratios that are used to evaluate distributors in the Canadian industry, the MGA is assumed to have a market value of about $300 million. Our sources reach this calculation with the understanding that Horizon's current EBITDA (earnings before interest, taxes, depreciation, and amortization) is around $30 million.