By outperforming the global property and casualty insurance industry financially, Intact Financial Corporation believes it can fend off a hostile takeover bid from a larger player.
Louis Gagnon, president of Canadian operations, shared this view with Insurance Journal.
This financial prowess always raises the potential acquisition multiple, which makes Intact a less attractive acquisition target than an ailing company, Gagnon explains.
“Delivering exceptional performance is a good way to stave off a takeover. The multiple at which a company trades shapes its desirability as a potential target. If it continually demonstrates its ability to perform well, that people value it and that it can pay dividends, it becomes more difficult to buy. At Intact, we want to maintain this performance so that we are perceived well in the market. It’s a quality that we are protecting,” he adds.
Intact has no specific ambition in terms of the size, Gagnon continues. Rather, its ambitions lie in its results in the markets in which it operates.
“We have always strived to ‘outperform’ the industry, and to ensure that our brand is respected by investors. That’s why we invested in the United States. We thought it was the place where we could make a difference, consolidate and bring some of our expertise. We’re in the process of proving that,” he says.
This philosophy underlies the recent announcement of the acquisition of RSA, which should be completed in second quarter 2021. “We believe that we can further improve our position in Canada, where there’s still room for consolidation. It remains our preferred location for investment. For example, RSA brought us a presence in other countries. So, we think we’re in a good position to leverage our expertise and get a boost from that,” Gagnon explains.
He reiterates that it is not Intact’s size that makes it an attractive company, but rather its results.
“We will remain disciplined. We do property and casualty insurance; nothing else. That’s why we are looking to other small companies to fuel our growth.”
This article is a Magazine Supplement for the February issue of the Insurance Journal.
