Intact Financial Corporation is injecting with a Danish partner CA $ 12.3 billion to acquire RSA Insurance Group. The Toronto insurer has also committed to invest $ 1.5 billion in the development of technologies in Quebec, ‘within five years, and it plans to create around 500 jobs.
“This is a major transaction that will take us to the next level based on more than ten years of growth and performance,” said enthusiastic Intact CEO Charles Brindamour.
This purchase will boost the workforce of the Canadian organization worldwide from 16,000 to 26,000 workers. In Quebec, the company has 5,000 employees in its offices in Montreal, Anjou, Quebec City and Saint-Hyacinthe. This number will increase by 4% with RSA staff.
To get hold of the British company RSA, Intact has joined forces with the company Tryg A / S. The duo will be co-owners of the company.
Supported in particular by an investment of CA $ 1.5 billion from the Caisse de dépôt et placement du Québec (CDPQ), Intact will pay $ 5.1 billion in connection with this transaction. The bill for Tryg will be $ 7.2 billion.
“We intend to build on the strengths of both organizations by combining our expertise in the area of data, indemnification and risk screening,” explained Mr. Brindamour.
Intact, which describes itself as the largest provider of property and casualty insurance in Canada and a leading provider of specialty insurance, will own RSA’s Canadian, UK and international operations, and Tryg will have the Swedish and Norwegian markets.
For Denmark, the income will be shared between the two insurers.
Intact management believes that this acquisition will allow it to gain traction in the UK and Irish markets and to consolidate its presence in the property and casualty insurance industry in Canada. The company’s annual premiums written around the world will increase from $ 12 billion to $ 20 billion.
“Easily” 500 positions
As for investments of $ 1.5 billion in boxes for Quebec, management assures us that it is not just amounts already budgeted annually for the development of new technologies.
“Several of the company’s key sectors are in Quebec. We are talking about finance, treasury, investment management, risk management, technology and artificial intelligence, ”enumerates Mr. Brindamour. “The investment of $ 1.5 billion represents an increase of approximately 50% of our investments at present,” he continues.
Year in and year out, Intact invests around $ 200 million for technology development. Management estimates that the planned investments in this sector and the needs to support its growth should translate into the creation of “easily” 500 positions across the province by 2025.
The RSA purchase agreement is subject to customary regulatory and shareholder approvals. The companies hope to have completed the acquisition in the second quarter of 2021.
In 2019, Intact also spent approximately $ 1 billion to acquire La Garantie and Frank Cowan Company.
On Wednesday, the insurers iA Financial Group and La Capitale / SSQ Insurance preferred not to comment on the financial assistance from the CDPQ allowing Intact to carry out this transaction.
Impacts of the transaction for Intact
- Assets under investment management: $ 20 billion to $ 40 billion
- Annual premiums written in Canada: from $ 10 billion to $ 13 billion
- From 16,000 to 26,000 workers worldwide
- To complete this transaction, Intact completed a $ 3.2 billion round of financing with CDPQ, RPC Investments and the Ontario Teachers’ Pension Plan.