Next steps for integrating RSA into Intact

As Intact puts the “final touches” on its proposed acquisition of RSA Canada, Intact’s executives say they may be looking at “strategic alternatives” for some of the RSA plc operations it has agreed to acquire.

During Intact’s 2021 Q1 earnings call on May 12, an investment banking analyst asked Intact’s senior leadership about the new countries in which Intact will operate as a result of its tripartite deal with RSA and Tryg. More specifically, the analyst asked if Intact needs more time to assess its strategy of either improving the RSA operations it will acquire or pursuing alternatives.

Under the terms of the mega-merger, announced last year, 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.

“For most markets, we are putting the final touches of how performance will be built, and I think there are a couple of areas where we are exploring strategic alternatives at the moment; and as such, our game plan is pretty clear,” replied Intact CEO Charles Brindamour.

Earlier in March, Intact chief financial officer Louis Marcotte discussed Intact’s approach during a virtual fireside chat with RBC Capital Markets research analyst Geoffrey Kwan. At that time, Kwan asked Marcotte about the possibility of Intact selling some of the RSA assets that it will acquire.

“The objectives of the [RSA] transaction was not to build a global empire here. Really the idea was to bolster our Canadian presence, then strengthen our specialty lines,” Marcotte said at the time. As such, for all the RSA markets Intact is acquiring, Intact executives are going to ask themselves two essential questions, said Marcotte. The first is: Does the business have ability to outperform in the  market in which it operates? If it does not, then the next question is: Does the business support Intact’s specialty lines global franchise?

“If the answer to those two questions is no, then I think we will be looking at strategic alternatives for those specific markets,” Marcotte said during his Mar. 9 fireside chat with Kwan. “If the answer is yes, then those are keepers and we will be maintaining them as we run any line of business that we run in our existing portfolios.”

In the meantime, Intact is making preparations for finalize the deal, expected to close on June 1, 2021.

“We look forward to welcoming the RSA folks into the Intact family in three weeks,” Intact CEO Charles Brindamour said during a recent conference call, in which he discussed his firm’s financial results for the three months ending Mar. 31. “The (RSA Canada and Intact) teams are collaborating really well as we work together to put the final touches on the integration and transition plans.

“We are also finalizing our leadership structure with the names to further strengthen our bench, elevate top talent, and operate with the best team in the insurance business.”

Feature image via iStock.com/Atstock Productions