February 10, 2015 by Canadian Underwriter
Intact Financial Corporation (IFC) is expanding its direct operations in Western Canada – thereby extending the insurer’s direct-to-consumer operations from coast to coast – with the announcement Tuesday evening that it has acquired Canadian Direct Insurance Inc. (CDI).
IFC reports in a statement that it has entered into a definitive agreement with Canadian Western Bank to acquire CDI. The transaction has been approved by the boards of both companies and is expected to close in mid-2015, subject to the receipt of the required regulatory approvals and customary closing conditions, notes IFC, the largest provider of property and casualty insurance in Canada with $7.3 billion in premiums.
IFC reports that the $197 million acquisition is expected to be financed exclusively with excess capital and to provide accretion of 2% in the near term to net operating income per share. Annual synergies amounting to $10 million after tax are expected from a combination of reinsurance cost reductions, systems-related cost savings and claims efficiencies.
It is also anticipated that the company’s strong capital position will be maintained on closing with an estimated MCT above 200%, and that the acquisition will help simplify the insurance experience for customers.
“Growth and innovation are continuing priorities for IFC, which is why I am excited about bringing CDI into the IFC family,” Louis Gagnon, president of service and distribution for IFC, says in the statement.
Gagnon points to the acquisitions of AXA Canada, Jevco and Metro General as having helped IFC “build one of the broadest product and service offerings, and facilitated increased support and innovation for our brokers and their customers. The CDI acquisition presented an opportunity to grow our direct-to-consumer distribution channel.”
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CDI – which wrote approximately $140 million in home and auto premiums in 2014 – will bring greater scale to IFC’s direct operations in Western Canada, an experienced local team and a track record of strong underwriting performance.
In conjunction with the acquisition, IFC will rebrand Grey Power to belairdirect to consolidate the company’s brands. “Together, these changes will expand and simplify our direct operations while improving our ability to respond to evolving customer expectations,” Gagnon points out.
Going forward, customers of Grey Power – which provides insurance solutions to Canadians over the age of 50 in Alberta, Ontario, New Brunswick, Prince Edward Island and Nova Scotia – will benefit from all that belairdirect has to offer while continuing to be rewarded for their years of driving experience.
“In addition, belairdirect will inherit and enhance some of the Grey Power products that have been uniquely tailored for the 50+ demographic and make them available to existing belairdirect customers,” the statement adds.