Travellers to buy E-L’S Dominion of Canada

NEW YORK • the lone property insurer in the Dow Jones Industrial Average, agreed to buy Dominion of Canada General Insurance Co. from E-L Financial Corp. for about US$1.1-billion in cash.

Dominion will be combined with Travellers’ operations in Canada and have headquarters in Toronto, the New Yorkbased buyer said Monday in a statement. The deal is expected to be completed in the fourth quarter, according to the statement.

“This gives them an immediate scale and platform” in Canada, said Mark Dwelle, an analyst at RBC Capital Markets. “The laws are fairly similar and a lot of the customers overlap as well. A lot of Canadian companies do business in the U.S. and vice-versa. The language is the same.”

Travellers, led by Chief Executive Officer Jay Fishman, 60, has been seeking growth outside the U.S. The insurer in 2010 struck a deal to take a stake in Brazil’s J. Malucelli Participacoes em Seguros e Resseguros SA. “This transaction is consistent with our strategy to make thoughtful investments in attractive markets outside the United States,” Mr. Fishman said in the statement.

The deal will help E-L narrow its focus to life and health coverage and savings products such as mutual funds and annuities through Empire Life Insurance Co. E-L said it hasn’t determined a plan for the sale proceeds.

Brigid Murphy, CEO and president of Dominion, will hold both roles at the combined Canadian operation. George Petropoulos, who leads Travellers Canada, will become vice chairman of the new organization.

Dominion was founded in 1887 and was initially led by Sir John A. Macdonald, Canada’s first prime minister. The company got about 60% of its policy sales last year from auto coverage and the remainder from personal property and commercial property-casualty policies, according to a filing. Three- quarters of its sales came from Ontario.

The purchase price is about 27% higher than Dominion’s shareholder capital of $882.6-million at the end of March. The E-L unit had net income of $40.3-million in 2012, the filing shows. Its investment portfolio was valued at more than $2.6-billion as of Dec. 31, led by fixed-income holdings including Canadian corporate debt and government securities.