“We are now ready to combine our businesses and start delivering on our financial objectives,” says Intact’s chief executive officer, Charlies Brindamour. Under the agreement, Intact retains RSA’s Canadian, United Kingdom and international businesses, Tryg retains RSA’s Swedish and Norwegian businesses, and the two businesses will co-own RSA’s Danish business.
A portion of Intact’s $5.2-billion payment for RSA’s business was financed with help from the Caisse de dépôt et placement du Québec, Canada Pension Plan Investment Board and Ontario Teachers' Pension Plan Board, and from an underwritten private placement of subscription receipts to accredited investors and other exempt purchasers. The company will make dividend payments to these investors on or about June 4, 2021.
In Canada, the company says the deal expands both its customer base and product offering and adds international expertise to its specialty lines platform. In Canada, premiums are expected to increase 30 per cent for the company to an estimated $13-billion annually. In its North American business, the company says it expects its specialty lines platform will grow by approximately 30 per cent to more than $4-billion of premiums annually.
The company’s new U.K. and Ireland business, meanwhile, represents approximately $4.4-billion of annual premiums. When combined with its European and Middle Eastern business, the new international segment is expected to have approximately $5.2-billion of annual premiums.
“The acquisition increases Intact’s premiums by approximately 70 per cent and enables further investment in the company’s core capabilities of data, risk selection, claims and supply chain management,” the company said in a statement. “The acquisition is expected to generate high single digit net operating income per share accretion in the first 12 months following closing of the acquisition, increasing to the upper teens within 36 months.” The company adds that it expects its operating return on equity to be in the mid-teens in the medium term. Book value per share is estimated to increase by more than 20 per cent.
“We are delighted to welcome RSA employees to the Intact family,” Brindamour adds. “Together we will continue to focus on delivering second-to-none customer experiences and creating significant value for our shareholders.”