March 1, 2021 by Greg Meckbach
Intact Financial Corp. will probably not be finished acquiring other insurers after Intact absorbs RSA Canada.
“We will be ready at some point to take on more transactions in Canada,” Intact CFO Louis Marcotte said during the 22nd Annual Credit Suisse Virtual Financial Services Forum. He did not name any specific deals in the pipeline.
Intact agreed this past November to form a consortium with Denmark-based Tryg A/S to acquire London-based RSA plc. The deal has yet to close. It has been approved by Canada’s competition regulator as well as by RSA shareholders.
Before the RSA deal closes, which is anticipated to happen in 2021 Q2, it would be “a bit ambitious” to buy another carrier, Marcotte suggested Feb 24 during a virtual fireside chat with Credit Suisse analyst Mike Rizvanovic.
Intact is expected to have about 22% market share in the Canadian P&C space once the RSA deal is completed, Marcotte said during the chat.
Rizvanovic asked Marcotte whether, as insurers grow in market share, there is some kind of a range in which a carrier’s market share might pique the interest of regulators.
“I think the hard line is more [about] 35%, where they get very active, but below that they will analyze the file,” said Marcotte.
“If you look at the life companies for example, the market shares are pretty much in the 30-ish range. So up until there, we don’t see a hard line that would be a cap. Maybe there are some specific markets or lines of business that would have to be dealt with, but we don’t see it as a big barrier at this point in time. We still have plenty of room to grow organically and inorganically in Canada.”
Both Rizvanovic and Marcotte agreed there is room for more consolidation among Canadian P&C carriers.
Some of that consolidation is driven by the need to invest heavily in technology, said Marcotte.
“For various reasons, we think players will want to trade assets, but then the reasons for motivating the sellers and then trying to get the right pricing environment is another variable that makes those transactions – when they are available, you have to take them essentially. They won’t come when you think they will come. They just come over time. The reality is, you don’t get there by luck,” said Marcotte.
“If you want to be in the game when the transaction happens, you have got to be talking to people all the time.”
Feature image via iStock.com/Kritchanut