RSA Canada to buy GCAN Insurance Company for $420 million

RSA Canada has entered into an agreement to purchase GCAN Insurance Company and its parent company, Glenstone Capital Incorporated, from the Ontario Teachers’ Pension Plan Board for approximately $420 million.
“This is actually the second-largest insurance company acquisition in the past 10 years in the Canadian P&C market, and it’s important because it’s now moved RSA up to the fourth-largest general insurer in Canada,” RSA Canada president and CEO Rowan Saunders said in an interview.
Prior to the deal, RSA Canada stood fifth in terms of 2009 premiums written. The consolidation is expected to increase RSA Canada’s premium base from $1.9 billion (based on 2009 figures) up to $2.2 billion.
Completion of the transaction is subject to regulatory approval.
“GCAN is really a scarce opportunity in the Canadian marketplace,” Saunders said. “It’s a commercial insurance company that focuses on mid-market risks, large commercial corporate risks and specialty business. And that’s an area in which RSA has been looking to both bring in business and extend our appetite.
“This really accelerates our commercial insurance vision and strategy.”
Saunders further noted the deal will strengthen RSA’s commercial capabilities by adding further technical expertise, geographic diversification and product breadth.
“The transaction will also drive significant additional reinsurance, capital and other synergies,” he said. “I am very excited about the opportunities ahead.”
GCAN had a combined operating ratio (COR) of 81% in 2009 and an average COR of 77% over the past five years.
GCAN wrote annual premiums of approximately $255 million in 2009. The company employs 148 people in four locations across Canada, and partners with a network of 130 brokers.
“Today’s announcement validates the excellence in product and service delivery that is the goal of all GCAN employees,” noted GCAN president Daniel Courtemanche. “The combined skill sets and distribution reach of the group will provide a formidable presence in the Canadian P&C marketplace.”