March 25, 2010 by Daryl-Lynn Carlson
Kingsway Financial Services Inc. is selling York Fire & Casualty Insurance Co. to La Capitale General Insurance Inc., a member company of the mutual company, La Capitale Financial Group Inc., which is owned by members of Quebec¹s civil service.
“It goes without saying that this acquisition will form a solid base for our strategic business development in the general insurance market across Canada”, explains Robert St-Denis, president and CEO of La Capitale Financial Group Inc. and La Capitale Civil Service Insurer Inc.
Kingsway, which says it wants to concentrate on non-standard auto and trucking, expects gross proceeds of $95 million or approximately two times York¹s shareholder equity at the closing of the deal. Kingsway anticipates an estimated gain before taxes of about $50 million.
³The sale of York furthers Kingsway¹s strategy of focusing its resources on its core lines of business, such as non-standard automobile and trucking,² says Kingsway president and CEO Shaun Jackson. ³In doing so, we are building a stronger platform for achieving growth and sustainable profitability in our leading products, where we have true competitive advantages.²
York writes standard personal lines automobile and property insurance in Ontario and Alberta through a network of more than 200 brokers operating from some 350 offices.
York generated $122 million in written premiums in 2007.
For the first six months of 2008, the company had gross premiums written of approximately $48 million — 5 per cent of the premiums of the Kingsway group of companies — and it reported an underwriting loss.
“For La Capitale General Insurance, the attraction of this transaction lies chiefly in the access it provides to a major brokerage network that is already well-established in Ontario and Alberta,² says John Strome, president and COO of La Capitale General Insurance Inc. ³In future years, we intend to capitalize on the strength of this existing network by putting into place all of the support and resources necessary to expand it further and enhancing products and services.”
The York acquisition is La Capital¹s second purchase in Ontario in two years. In 2006, La Capitale Civil Service Insurer Inc. Penncorp Life Insurance Co., a specialty accident and disability insurance provider.
This story was originally published by Canadian Insurance Top Broker.