Intact eyes its biggest takeover
After a decade of buying up rivals to become Canada’s largest property and casualty insurer, Intact Financial Corp. is looking across the Atlantic with its biggest deal yet.
Intact sealed an agreement Wednesday to buy the Canada, U.K. and international operations of London’s RSA Insurance Group Plc as part of a $12.3-billion transaction. Denmark’s Tryg A/S is taking RSA’s Swedish and Norwegian operations.
Intact’s portion of the deal is $5.1 billion and brings it into entirely new markets in Europe while bulking up its core Canadian business. It supercharges an acquisition spree that has turned the Toronto-based company into the dominant force in Canada’s non-life insurance industry, a little more than a decade after it was cast off by Dutch insurer ING Groep NV.
The RSA deal also will be a major test of whether chief executive officer Charles Brindamour, 50, can replicate the firm’s success in digesting acquisitions on a larger scale and farther afield than it has ever attempted before.
“We have an established track
record of integrating companies,” Brindamour said during a news conference on Wednesday. “We’ve done that many times in the past. We feel that we are in a strong position to tackle that challenge.”
Intact traces its roots back to 1809, when a group of businessmen formed the Halifax Fire Insurance Association. That firm was acquired in the 1950s by a Dutch insurer that eventually became part of ING. In 2009, ING divested its 70 per cent stake in ING Canada Inc., which changed its name to Intact.
Brindamour, who had become CEO about a year earlier, wasted little time in bulking up the newly independent insurer. Intact bought French insurer Axa SA’s Canadian business in 2011, bolstering its domestic premiums by almost 50 per cent.
Intact went on to make 12 more deals with a total announced value of about $3.1 billion (U.S.) before the RSA acquisition, according to data compiled by Bloomberg. The firm serves about one in five families and one in four small- and medium-sized businesses in Canada, Brindamour said.
So far, the strategy has been rewarded. The company’s shares have risen more than fourfold from May 19, 2009, the day its listing as Intact became official. That compares with a 67 per cent gain for the S&P/ TSX Composite Index. Intact’s market value of about $21 billion (Canadian) is up about fivefold in that time.