Intact Financial, Tryg to buy RSA Insurance for C$12.3bn

Intact Financial Corp and Tryg have agreed to acquire UK-based RSA Insurance Group.

Intact Financial Corp and Tryg have agreed to acquire UK-based RSA Insurance Group. The deal’s total consideration is about £7.2 billion (C$12.3 billion), with Intact paying C$5.1 billion and Tryg paying C$7.2 billion. Intact, a Toronto-based provider of property and casualty and specialty insurance, this month lined up C$3.2 billion of financing for the deal from Caisse de dépôt et placement du Québec, Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan Board.


TORONTO, Nov. 18, 2020 /CNW/ – Intact Financial Corporation (TSX: IFC) (“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:
$4.45 billion of private placement subscription receipts as previously announced on November 12, 2020;
$0.6 billion bank term loan facility entered into on announcement; and
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) 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

A replay of the call will be available later today until midnight on November 24th 2020. To listen to the replay, call 1 (416) 849-0833 or 1 (855) 859-2056 (toll-free in North America), passcode 3568117.

A transcript of the call and link to the audio webcast will also be made available on Intact’s website at under “Investors”.

Rule 2.7 of the UK City Code on Takeovers and Mergers
In accordance with Rule 2.7 of the UK City Code on Takeovers and Mergers, a formal announcement (“Announcement”) has been published and is accessible on Intact’s website at This news release should be read in conjunction with, and is subject to, the full text of the Announcement (including its appendices). The offer will be subject to the conditions and certain further terms set out in the Announcement and to the full terms and conditions to be set out in the offer document.

About Intact
Intact Financial Corporation is the largest provider of property and casualty (P&C) insurance in Canada and a leading provider of specialty insurance in North America, with over $11 billion in total annual premiums. The Company has approximately 16,000 employees who serve more than five million personal, business and public sector clients through offices in Canada and the U.S.
In Canada, Intact distributes insurance under the Intact Insurance brand through a wide network of brokers, including its wholly-owned subsidiary BrokerLink, and directly to consumers through belairdirect. Frank Cowan Company, a leading MGA, distributes public entity insurance programs including risk and claims management services in Canada.

In the U.S., Intact Insurance Specialty Solutions provides a range of specialty insurance products and services through independent agencies, regional and national brokers, wholesalers and managing general agencies. Products are underwritten by the insurance company subsidiaries of Intact Insurance Group USA, LLC.

About RSA
RSA is a focused international insurance group, with strong positions in the large general insurance markets of the UK, Scandinavia and Canada, together with supporting international business in Ireland, Continental Europe and the Middle East.
RSA is well balanced between personal and business customers, and across product lines and distribution channels. RSA’s net written premiums in 2019 were £6.4 billion. RSA is listed on the London Stock Exchange.

In Canada, RSA operates across all provinces, offering a range of personal and commercial lines products. In personal lines, which in 2019 accounted for around 72% of Canadian business, RSA operates under the leading brand Johnson, as well as the RSA brand via brokers. RSA Canadian commercial lines business operates through brokers.

In the UK, RSA operates across both personal and commercial lines. Personal insurance (49% of business in 2019) is offered to customers through MORE TH>N and affinity partners, which include major retailers and large banks. RSA has a strong presence in the UK motor, home and pet markets. In 2019, 51% of RSA UK business was in commercial lines.

In Scandinavia, RSA operates as Trygg-Hansa in Sweden and Codan in Denmark and Norway. In 2019, approximately 60% of RSA’s Scandinavian Business was personal lines and 40% was commercial lines. RSA distributes mainly direct to customers in Scandinavia, but also leverages strong agency relationships.

About Tryg
Tryg is one of the leading non-life insurance companies in the Nordic region with activities in Denmark, Norway and Sweden. Tryg had total premiums of DKK 21.7 billion (approx. EUR 3 billion) at year end 2019 and is active in the Private, Commercial and Corporate segment across the Nordic region. Tryg provides coverage to 4 million customers on a daily basis. Tryg is listed on Nasdaq Copenhagen.