Where Intact sits with the RSA acquisition

Now that Intact Financial Corp.’s deal to acquire a large chunk of RSA plc has been approved by both the federal Competition Bureau and RSA shareholders, Toronto-based Intact expects the deal to close by July and has more than two dozen teams looking at various parts of RSA’s business.

“We are working to ensure we hit the ground running with RSA,” Intact CEO Charles Brindamour said Wednesday during a conference call discussing Intact’s 2020 financial results.

The agreement, announced this past November, would have Intact form a consortium with Danish insurer Tryg A/S to acquire London-based RSA. If approved, Intact would acquire RSA’s operations in Canada, Britain, Ireland and the Middle East. Tryg would acquire RSA’s operations in Sweden and Norway. RSA’s operations in Denmark would be split 50/50 between Intact and Tryg.

“We have 27 transition teams that are looking at various parts of the [RSA] business. Each of those teams has a specific target that is informed by the information that we have had access to,” Brindamour said Wednesday. An investment banking analyst asked about the synergies Intact is predicting it will gain from the RSA deal.

In its management discussion and analysis released Tuesday, Intact said it expects more than $250 million of pre-tax annual run-rate synergies within 36 months of the RSA deal closing.

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“It’s all-hands-on-deck as we continue to work with regulators in different countries [other than Canada] for the remaining approval,” Brindamour during Wednesday’s conference call of the RSA deal, which has been approved by directors at RSA, Tryg and Intact.

“We have met with most of the [RSA] senior management team as we undertake strategic reviews of the business.”

The deal is expected to cost Intact and Tryg Cdn$5.2 billion and Cdn$7.3 billion respectively.

Brindamour reiterated Wednesday Intact’s prediction that the RSA deal is on track to close during the second quarter of 2021.

Intact is Canada’s largest property and casualty insurer when measured by net premiums written. Canada-wide, Intact and RSA had 15.3% and 4.4% respectively of the total Canadian P&C insurance market in 2019, according to the 2020 Canadian Underwriter Statistical Guide. RSA ranked seventh in the overall market.

The acquisition of RSA’s Canadian, U.K., and international operations is expected to increase Intact’s annual premiums from $12 billion to $20 billion, Intact said Tuesday. The acquisition will increase both Intact’s premiums in Canada and its total premiums in specialty lines by about 30%.

Intact writes commercial specialty in both Canada and the United States. Intact acquired Minnesota-based OneBeacon and Toronto-based The Guarantee Company of North America in 2017 and 2019 respectively.

Intact’s net premiums written grew almost 10%, from $10.57 billion in 2019 to $11.62 billion in 2020, the company reported Tuesday. Its combined ratio improved from 6.3 points from 94.5% in 2019 to 89.1% in 2020.

Feature image via iStock.com/Kritchanut