Desjardins General Insurance Group (DGIG) belongs to a consortium of investors that is buying the insurer ICPEI and turning it into a private company.

The Insurance Company of Prince Edward Island (ICPEI) is, as its name suggests, a property and casualty insurance company based in Canada’s least populated province. The insurer, which also writes risks in Nova Scotia and New Brunswick, is owned by ICPEI Holdings, a company listed on the TSX Venture Exchange.

On December 9, ICPEI Holdings announced that it had entered into a going-private agreement on that same date. The consortium of acquirers offered shareholders cash consideration of $4.00 per share, a premium of 90.5 per cent over the previous day’s closing price of $2.10 per share.

The purchase price granted to the shareholders corresponds to a 75 per cent premium to the average value of the share in the previous 30 days. The stock began to rise in value following the announcement. At the end of the trading day on December 20, the stock was worth $3.89 and the market capitalization was estimated at $59.2 million.

The purchaser, 100037990 Ontario Ltd., was formed by existing shareholders of the company, including its key members of management. The ICPEI Holdings mentions that the “rollover shareholders” include Serge Lavoie, President and CEO, Murray Wallace, chairman of the board, Robert Ghiz, director of the company, Teddy Chien, CFO, and Ken Coulson, general counsel.

This rollover holding company will own approximately 66.1 per cent of the shares of the new company. These same shareholders currently own approximately 33.1 per cent of the stock of ICPEI Holdings.

Certain other investors are expected to collectively own, directly or indirectly, 6.4 per cent of the company, and Desjardins is expected to hold an indirect interest in the remaining 27.5 per cent.

Melissa Nadon, marketing supervisor at ICPEI, confirmed to Insurance Portal that Desjardins had no previous relationship with ICPEI; this would be a new partnership.

Desjardins spokesperson Valérie Lamarre told Insurance Portal that the new investor will wait for shareholder approval and the closing of the transaction before elaborating further on its intentions regarding this partnership.

Independent committee  

A special meeting of shareholders to approve the transaction is scheduled for February. A special committee of independent directors, co-chaired by Sharon Ranson and James Falle, has been established and is recommending that shareholders accept the offer. 

In addition to providing other shareholders with immediate cash value, Ranson said, the company will have “additional flexibility to operate as a private company in the hands of a committed long-term investor.”

The board of directors, other than those who want to purchase the company, approved the Arrangement Agreement. Court approval of the plan of arrangement will be required under the Ontario Business Corporations Act. The transaction is not subject to a financing condition.

Origin Merchant Partners is acting as the exclusive financial advisor to the special committee, which has obtained legal counsel from the firm Blake, Cassels & Graydon.

McCarthy Tétrault is acting as legal counsel to the purchaser, and Desjardins Capital Markets is the purchaser’s financial advisor.

Serge Lavoie is a well-known figure in the brokerage industry. Robert Ghiz was Premier of Prince Edward Island from June 2007 to February 2015. Ken Coulson has held legal counsel positions at Echelon and Chubb. 

ICPEI Holdings was formerly known as Echelon Financial Holdings (EFH). It changed its name in July 2021. It was the majority shareholder of Echelon Insurance until the company was sold in fall 2018. EFH has been the sole shareholder of the insurer ICPEI since March 2021.

ICPEI has been underwriting risks in Quebec through wholesaler Revau (formerly GroupAssur) since the fall of 2021.