Canadian Underwriter

RSA shareholders approve Intact-Tryg takeover

January 18, 2021   by Greg Meckbach

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Intact Financial Corp.’s proposed takeover of RSA Canada has crossed two additional hurdles.

The deal was approved Monday by a majority of shareholders of London-based RSA, Intact said in a release. Canada’s federal competition bureau has also approved the deal, Intact said Monday.

Intact and Denmark-based Tryg A/S intend to form a consortium to jointly acquire RSA. The deal, originally announced in November, is valued at about £7.2 billion, with Intact paying £3.0 billion (CDN$5.2 billion) and Tryg paying £4.2 billion (CDN$7.28 billion).

The friendly deal is not yet final because it still requires regulatory approval in jurisdictions outside of Canada, though Intact expects the deal to be complete during the second quarter of this year. Assuming the deal meets all required approvals, Intact will acquire RSA’s operations in Canada, Britain, Ireland and the Middle East. Tryg would acquire RSA’s business in Sweden and Norway. Intact and Tryg would co-own what is currently RSA’s business in Denmark.

In 2019, Intact led the Canadian property and casualty insurance industry with 15.3% market share, according to the 2020 Canadian Underwriter Statistical Guide. RSA had 4.4% market share, Canada-wide, when measured by net premiums written.

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

During a press conference this past November, Intact CEO Charles Brindamour was asked whether Intact will continue going to market in Canada using RSA’s brands including Johnson, Unifund and Canadian Northern Shield.

“We have not made a final determination,” Brindamour said at the time.

The deal with Tryg and RSA came a year after Intact bought The Guarantee Company of North America and three years after Intact OneBeacon Insurance Group Ltd. OneBeacon is based near Minneapolis while The Guarantee is based in Toronto.

“Intact was successful with the acquisition of OneBeacon, so I do not see any reason why they could not be successful expanding internationally by acquiring part of RSA,” said Victor Adesanya, vice president of insurance for credit ratings firm DBRS Morningstar, told Canadian Underwriter earlier.

“RSA is more international than Intact. As a result, RSA has more brand recognition internationally, especially in Europe. I am not sure what they are going to do with the RSA brand because it is a strong name. They might keep it,” Marcos Alvarez, senior vice president and head of insurance for DBRS Morningstar, told Canadian Underwriter earlier.


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