Intact Financial, Danish insurer Tryg offer GBP 7.1B for RSA

November 5, 2020.
Big Ben and the Palace of Westminster in London, England, the city where British insurer RSA is headquartered. (Photo by Lucas Davies on Unsplash)

Big Ben and the Palace of Westminster in London, England, the city where British insurer RSA is headquartered. (Photo by Lucas Davies on Unsplash)

Canada’s largest property and casualty insurer, , and Danish insurer Tryg have teamed up to make a GBP 7.1 billion ($9.33 billion) takeover offer for British insurer RSA, potentially allowing Intact to expand into Europe.

RSA disclosed the proposal Thursday, which would be worth about GBP 0.685 ($0.90) per share, representing a 49% premium over the current share price. Intact would acquire the company’s Canada and United Kingdom operations, while Tryg would take on its assets in Sweden and Norway. The two companies would split RSA’s business in Denmark. The companies have not yet made a formal bid.

RSA said that its board communicated to Intact and Tryg “that it would be minded to recommend the proposal, subject to satisfactory resolution of the other terms of the possible offer, including a period of due diligence.”

Should a deal move forward, it would result in the U.K.’s eighth-largest insurance company by total assets changing hands, and Intact’s largest-ever acquisition.

“Intact is the largest player by a wide margin,” said Morningstar analyst Marcos Alvarez, referring to Canada’s property and casualty market. Alvarez mentioned that RSA has around 5% of that market, and that the deal would give Intact nearly a quarter of the country’s property and casualty market share, which could elicit regulatory concerns. 

Alvarez said he was “surprised given the size of the target, but not surprised by Intact’s strategy.” The insurer is “an outstanding market player,” and an “aggressive company looking to expand internationally.” Intact acquired North American insurer OneBeacon in 2017. The company had a net income of CAD 334 million ($255.24 million), a year-over-year improvement of 78.6%.

RSA’s profits, however, were down 7% in the first half, and the company cut 300 full-time jobs in August.

“I think they’re in sell mode,” Alvarez said of RSA, which considered an acquisition bid from Zurich Insurance in 2015. “The performance of the company in the last two years has been challenging, and of course the environment in the world has added to that.” 

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