- Creates a leading specialty insurer in
North Americawith over C$2 billion( US$1.6B) in annual premiums
- Objective to grow the new specialty lines businesses in the U.S. and operate at a combined ratio in the low 90s within 24-36 months
- Creates additional opportunities for growth in the Canadian marketplace and diversifies Intact's business and geographical mix
- New cross-border offerings and new technology and entertainment insurance products for Canadian customers expected to be available in Q4
- Provides a growth platform to leverage consolidation expertise in the highly fragmented small to midsize North American market
- Expected to be accretive to net operating income per share within 24 months while maintaining a strong financial position
"The completion of this transaction represents a defining milestone in our history and our journey to build a world-class P&C insurer by combining Intact's leading commercial lines track record and deep data, claims and digital expertise with OneBeacon's high caliber team and specialty lines capabilities," said
Building a leading North American insurer – Executive Appointment
The combined specialty organization will be led by
"We are delighted to welcome the OneBeacon leadership and employees to the Intact family. We believe this new structure will help us accelerate the sharing of our specialty lines expertise and best practices across
"All of us at OneBeacon are excited to be part of the Intact team and together, build upon our combined capabilities to deliver a compelling specialty lines experience for agents and brokers throughout
New products for Canadian customers
IFC and OneBeacon have been working together for the past several months to review each organization's activities, processes and systems. In the fourth quarter, Intact will start offering OneBeacon's tailored specialty products and services in
New capabilities will provide coverages for all lines of business for technology risks including third-party cyber and professional liability for manufacturers of electronics, software and IT service providers, and the telecommunications industry. For the entertainment industry, comprehensive commercial insurance solutions for motion picture, television and documentary film makers will be offered, as well as for businesses associated with the motion picture and television industry.
New cross-border offerings
With its combined strengths, capabilities and talents, Intact has established a cross-border facility to better serve its Canadian-based customers with U.S. exposure, and its U.S. based OneBeacon customers with Canadian exposure.
"This seamless cross-border experience and broader geographic footprint will strengthen our ability to compete with other large international insurers," said Mr. Brindamour.
Accretive transaction while maintaining strong financial position
The acquisition is expected to be accretive to net operating income per share within 24 months. The financing has been structured to maintain balance sheet strength with debt to capital and minimum capital test (MCT) ratios of approximately 25 per cent and 200 per cent respectively at closing. The debt-to-capital ratio is targeted to be below 20 per cent within 24 months. Additionally, a reinsurance arrangement has been entered into to provide significant downside protection against adverse reserve developments.
IFC's balance sheet remains strong and well protected, allowing flexibility to pursue growth opportunities as they arise.
Financing and conversion of subscription receipts
Since the announcement of the acquisition in May, IFC has secured long-term financing at attractive rates. The
As a result of the closing of the acquisition, the 8,210,000 subscription receipts issued by IFC in
The subscription receipt conversion will increase the number of outstanding common shares to 139.2 million, resulting in the average outstanding number of common shares being 131.2 million for the third quarter 2017 and 131.1 million for the first nine months of 2017.
With the completion of the transaction, OneBeacon's common shares (NYSE: OB) have ceased trading and are being delisted from the
Forward Looking Statements
This press release contains forward-looking statements. When used in this press release, the words "may", "will", "would", "should", "could", "expects", "plans", "intends", "trends", "indications", "anticipates", "believes", "estimates", "predicts", "likely", "potential" or the negative or other variations of these words or other similar or comparable words or phrases, are intended to identify forward-looking statements. This press release contains forward-looking statements with respect to, among other things, future product offerings and expected financial performance.
Forward-looking statements are based on estimates and assumptions made by management based on management's experience and perception of historical trends, current conditions and expected future developments, as well as other factors that management believes are appropriate in the circumstances. Many factors could cause the Company's actual results, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors: timing of the distribution of common shares of IFC in exchange for the subscription receipts; the Company's ability to implement its strategy or operate its business as management currently expects; its ability to accurately assess the risks associated with the insurance policies that the Company writes; unfavourable capital market developments or other factors which may affect the Company's investments, floating rate securities and funding obligations under its pension plans; the cyclical nature of the property and casualty insurance industry; management's ability to accurately predict future claims frequency and severity, including in the
Certain material factors or assumptions are applied in making these forward-looking statements, including that the anticipated benefits of the Acquisition to IFC will be realized, including the impact on growth and accretion in various financial metrics; that reserves will be strengthened following closing of the Acquisition; that the protection we have purchased against adverse reserve developments will be sufficient; the accuracy of certain cost assumptions, including with respect to employee retention matters; and the amounts that will be recovered from certain obligations and litigation matters.
All of the forward-looking statements included or incorporated by reference in this press release are qualified by these cautionary statements, those made in the "Risk Management" sections of management's discussion and analysis of operating and financial results for the year ended
The purpose of including information relating to the expected future combined ratio, NOPIS, MCT and the debt to capital ratio in this press release is to provide the reader with an indication of management's objectives and expectations, as of the date of this press release, regarding the Company's future performance and readers are cautioned that this information may not be appropriate for other purposes.
The Company uses both International Financial Reporting Standards (IFRS) and certain non-IFRS measures to assess performance. Non-IFRS measures do not have any standardized meaning prescribed by IFRS and are unlikely to be comparable to any similar measures presented by other companies. See section 23 of Management's Discussion and Analysis for the year ended