Canadian Underwriter

How high Intact’s market share could climb before competition becomes an issue

May 18, 2021   by Greg Meckbach

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Intact’s market share could approach 30% before it potentially runs into resistance from domestic competition regulators, a senior executive suggested Tuesday.

After the closure of the three-way deal for Intact and Tryg A/S to acquire RSA plc, Intact will have “just north of 20% market share” in the Canadian P&C market, said Darren Godfrey, senior vice president, commercial lines of Intact Financial Corporation, during a virtual fireside chat with Barclays institutional sales manager Jeff Bigelow.

During the Barclays Americas Select Franchise Conference, Bigelow asked Godfrey Tuesday what he thinks about where Intact is today (now that it is about to acquire RSA Canada) and how he thinks of growth more internationally.

“One thing we are very happy about was [that] early on, [after] signing the [RSA] deal, we got very, very quick confirmation from the Competition Bureau in Canada. So that was very encouraging,” replied Godfrey. “I think when you look at the Canadian space, we think we can push up towards 30% market share before starting to address competition issues, so we still feel as if we have some runway from that standpoint.

“The priority for the next dollar for M&A continues to be Canada, but you don’t always control timing, you don’t always control targets.”

Announced this past November, the deal will result in Intact acquiring RSA’s operations in Canada as well as in Britain, Ireland, and the Middle East. Tryg will acquire RSA’s operations in Sweden and Norway. RSA’s operations in Denmark would be split 50/50 between Intact and Tryg. the deal is valued at about Cdn$12 billion.

The federal Competition Bureau does not usually challenge a merger if the combined entity would have no more than 35% market share, according to Paul Collins, a lawyer who heads the competition and foreign investment group of Stikeman Elliott LLP. Collins made the observation in a 2019 interview with Canadian Underwriter. He was commenting about M&A in general, not about RSA and Intact.

“I do not think that Intact would run into anti-trust issues in Canada with the acquisition [of RSA Canada],” Marcos Alvarez, senior vice president and head of insurance at DBRS Morningstar, said in an interview in late 2020. “But even if there were anti-trust issues, it might only be in certain provinces where the combination of RSA and Intact might reach such a high level that the regulator might not be comfortable. If that is the case, it could be a matter of exiting or selling some parts of the businesses in particular provinces.”


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