Intact Financial Corporation, together with Tryg, to Acquire International P&C Insurer RSA Insurance Group Plc. for £7.2 billion (C$12.3 billion)

   Building a Leading P&C Insurer

  • Intact to acquire RSA’s Canada, UK and International operations
  • Intact to pay $5.1 billion (£3.0 billion) representing 0.9x book value
  • Expands our leadership position in Canada
  • Bolsters our leading specialty lines platform and adds international expertise
  • Entry into the UK and Ireland at scale
  • Increases investment in our core capabilities to strengthen our outperformance
  • High single digit NOIPS accretion in the first year, increasing to upper teens within 36 months
  • Maintaining mid-teens OROE target and BVPS increasing in excess of 25% at closing
  • Total capital margin over $1.5 billion at closing

TORONTO, Nov. 18, 2020 /CNW/ – Intact Financial Corporation (TSX: IFC[1]) (“Intact” or the “Company”) announced today that, together with Tryg A/S (CPH: TRYG) (“Tryg”) it has reached an agreement with RSA (LSE: RSA) (“RSA”) on the terms of a recommended all-cash acquisition for the entire issued and to be issued share capital of RSA at a price of 685 pence per common share, representing a total consideration of approximately £7.2 billion ($12.3 billion) (the “Transaction”). Intact will pay $5.1 billion (£3.0 billion) of the total consideration payable and Tryg will pay $7.2 billion (£4.2 billion). In addition to the cash consideration payable, RSA shareholders will also be entitled to the previously announced but unpaid interim dividend of 8 pence per share.

Pursuant to the Transaction, Intact will retain RSA’s Canadian, UK and International (“UK&I”) entities, Tryg will retain RSA’s Swedish and Norwegian businesses, and Intact and Tryg will co-own RSA’s Danish business.

The agreement to announce the Transaction has been recommended unanimously by the boards of directors of all three companies. The Transaction is subject to customary regulatory and shareholder approvals.

“This acquisition is highly strategic for Intact. It expands our leadership position in Canada, builds on our strong track record in specialty lines, and puts us in a solid position to strengthen RSA’s UK and Ireland operations. We have strong capabilities in data, risk-selection and claims management, which we plan to leverage across the business,” said Intact CEO, Charles Brindamour. “I look forward to welcoming RSA’s employees into our company and leveraging their deep expertise across the business. Together, we are stronger and more resilient.”

Highly Strategic

With the acquisition of RSA, Intact is taking a significant step to accelerate its strategy and leadership. The acquisition will expand Intact’s leadership position in Canada, create a leading specialty lines platform with international expertise, and provide entry into the UK and Ireland market at scale. The acquisition will strengthen Intact’s outperformance with increased investment in its core capabilities of data, risk selection, claims and supply chain management.

Expands leadership position in Canada

The acquisition expands Intact’s leadership position in Canada, with annual premiums written expected to increase by approximately 30% from $10 billion to $13 billion. The deal will boost Intact’s position in a competitive industry, where operational excellence is imperative for outperformance. As well, the acquisition enhances its commercial lines business, and both direct and broker channels simultaneously. Intact increases its ability to further invest in innovation to develop and accelerate new customer experiences, while leveraging its best-in-class expertise in pricing, segmentation, risk selection, claims and supply chain management, and digital platforms to enhance RSA’s operations. Canada is expected to account for approximately 75% of the entire value creation, in a region where Intact has a strong track record of integration.

Creates a leading specialty lines platform

The acquisition bolsters Intact’s North American specialty lines and adds international expertise in Europe. The combined specialty lines business is projected to grow by approximately 30% and represent over $4 billion in annual premiums. The business will benefit from an expanded product offering with strong global franchises in lines such as Marine, Specialty Property, and E&O/D&O. The specialty lines platform will also benefit from a broader distribution footprint, providing existing specialty franchises with access to new regions.

Entry into the UK & Ireland market at scale

Intact sees an attractive opportunity to build on RSA’s UK and Ireland franchises, which have leading industry positions, teams and brands. Intact will contribute its competencies in risk selection and claims management to improve underwriting performance. In commercial lines, where RSA has an attractive small-to-medium sized enterprise portfolio, there is a strong opportunity to share Intact’s successful operating model to improve performance. Further, in personal lines, Intact will apply its customer driven and digital expertise to this business.

As well, Intact will co-own a top 3 player in the Danish non-life segment, Codan, and retain strong partnerships in the Middle East with attractive profitability.

Significant Shareholder Value Creation

“Combining RSA’s business with ours will create significant shareholder value. Most of the value is expected to come from Canada, where our integration track record is proven,” said Intact CFO, Louis Marcotte.

Intact’s acquisition offers a unique opportunity to create significant value for its shareholders, with an anticipated internal rate of return (IRR) above the Company’s 15% threshold.

The acquisition is expected to generate high single digit NOIPS accretion in the first year, increasing to upper teens within 36 months.

Operating ROE is expected to be maintained at a mid teens level in the medium term. BVPS is expected to increase in excess of 25% on completion of the acquisition.

Attractive Valuation and Synergy Opportunities

Intact will be acquiring RSA’s Canadian and UK&I operations and co-owning the Denmark business for $5.1(£3.0) billion which represents an estimated 0.9x price to book value multiple based on balance sheet data as at June 30, 2020.

The acquisition is expected to generate significant value through growth, loss ratio and expense ratio improvements across the operations. Over $250 million of pre-tax annual run-rate synergies are expected within 36 months, before risk selection improvements. The acquisition of RSA’s Canadian operations is expected to drive approximately 75% of the value creation, with UK&I operations accounting for approximately 20% and specialty lines accounting for approximately 5%. Intact intends to apply its best-in-class digital, data and AI platforms, pricing and risk selection, claims management and investment, and capital management policies to RSA’s platform to drive strong growth and profitability.

Intact to Maintain Strong Capital Positions Post Acquisition

Intact will maintain a strong capital position on completion, with an estimated capital margin above $1.5 billion and an MCT ratio above 194% in Canada, a Solvency II coverage ratio above 160% in the UK and an RBC ratio above 400% in the US.

Intact’s debt-to-capital ratio pro forma at completion of the Transaction is expected to be approximately 26%, and is expected to fall to 20% within 36 months. Intact does not anticipate the Transaction and its planned financing structure to lead to a change in its current credit ratings.

Integration costs associated with the Transaction are expected to be between 1.5x to 1.7x of annual run rate synergies, expected within 36 months of closing.

Acquisition Financing

Intact intends to finance the $5.1 billion acquisition and $0.7 billion of additional related transaction costs for RSA’s Canadian, UK and International operations, and Intact’s share of RSA’s Danish operations with:

  1. $4.45 billion of private placement subscription receipts as previously announced on November 12, 2020
  2. $0.6 billion bank term loan facility entered into on announcement; and 
  3. a bond bridge facility that Intact intends to refinance with $0.8 billion of medium term notes and preferred share issuances.

As part of the acquisition, Intact also intends to assume the full amount of RSA’s outstanding issued debt and hybrid securities which total £0.8 billion ($1.3 billion) and £0.4 billion ($0.7 billion), respectively.

Tryg intends to provide $7.2 billion (£4.2 billion) for its purchase of RSA’s Norway and Sweden operations, and Tryg’s share of RSA’s Danish operations, using proceeds of a fully underwritten rights issue to be launched before acquisition closing.

The total funds of $12.3 billion (£7.2 billion) for the acquisition of RSA have been structured to ensure compliance with the “certain funds” requirements of the UK City Code on Takeovers and Mergers.

Closing and Approvals

The Acquisition is currently expected to be completed during the second quarter of 2021, subject to receipt of the relevant approvals or clearances from RSA Shareholders and the relevant regulatory and antitrust authorities and the satisfaction (or where capable of waiver) the waiver of the other conditions.


Barclays Bank PLC, acting through its Investment Bank, is acting as lead financial adviser to Intact. Clifford Chance LLP is acting as English law legal adviser, Blake, Cassels & Graydon and Torys are acting as Canadian law legal advisers, and Gorrissen Federspiel Advokatpartnerelskab is acting as Danish law legal adviser. CIBC Capital Markets is also acting as financial adviser to Intact.

Conference Call

Intact Financial Corporation (TSX: IFC[2]) will host a conference call today at 2:00 p.m. ET to discuss this transaction.

The conference call will be made available by dialing 1 (647) 427-7450 or 1 (888) 231-8191 (toll-free in North America). Please call 10 minutes before the start of the call. To listen to the call via live audio webcast, visit our website at[3].

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