NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
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Acquisition to expand Intact product offering to insurance brokers and
consumers into complementary lines
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Financing secured and IFC's capital position remains strong
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Estimated IRR above 20%
TORONTO, May 2, 2012 /CNW/ - Intact Financial Corporation (TSX: IFC)
announced today that it has entered into a definitive agreement with
The Westaim Corporation (TSX: WED) whereby IFC will acquire Westaim's
wholly-owned subsidiary, JEVCO Insurance Company, for $530 million.
JEVCO is a leading provider of specialty and niche products for
individuals and businesses in Canada with approximately $350 million in
direct premiums written in 2011 (based on industry data and public
disclosure).
The transaction, which is expected to close during the Fall of 2012, has
been approved by the boards of both companies and is conditional upon,
among other things, the approval of Westaim's shareholders and the
receipt of the required regulatory approvals. Alberta Investment
Management Corporation, on behalf of certain Funds whose investments it
manages, Goodwood Inc. and the directors and executive officers of
Westaim and JEVCO, have agreed to vote their Westaim shares
(representing in aggregate approximately 48.6% of the outstanding
common shares and approximately 53.7% of all outstanding shares
entitled to vote at the special meeting of Westaim shareholders) in
favour of the transaction.
According to Charles Brindamour, Chief Executive Officer of Intact
Financial Corporation, the transaction will complement the company's
offering of insurance solutions to consumers and brokers. "The
acquisition will allow us to expand our offering to brokers by
providing them the opportunities to offer their clients complementary
specialized products such as recreational vehicle insurance. It will
also broaden our offering of specialty lines products to businesses."
CIBC World Markets Inc. is acting as exclusive financial advisor to IFC.
Financing
IFC intends to finance the acquisition and related transaction expenses
from a combination of the proceeds of approximately $226 million bought
deal subscription receipt financing, funds to be advanced under its
existing revolving credit facility or other committed senior unsecured
financing arranged by IFC for this purpose and a portion of its
existing cash resources.
IFC expects to maintain its strong capital position on closing with an
estimated MCT above 200% in the near term and a debt to total capital
ratio estimated to remain below its target level of 20%.
Subscription Receipt Offering
IFC has entered into an agreement with a group of underwriters, led by
CIBC World Markets Inc. and TD Securities Inc. for the issuance of 3.6
million subscription receipts at a price of $62.75 per subscription
receipt for gross proceeds of $225.9 million pursuant to a bought deal
public offering in Canada where each subscription receipt will entitle
the holder to receive one common share of IFC upon closing of the
acquisition. IFC has also granted the underwriters the option to buy an
additional 180,000 subscription receipts exercisable at the offering
price for a period of 30 days after the closing for additional gross
proceeds of approximately $11.3 million. The offering is expected to
close on May 11, 2012.
About Intact Financial Corporation
Intact Financial Corporation (www.intactfc.com) is the largest provider of property and casualty insurance in the
country with $6.5 billion in premiums. Its 10,000 employees offer
home, auto and business insurance through Intact Insurance, Novex Group
Insurance, belairdirect and Grey Power.
The securities to be offered have not been and will not be registered
under the U.S. Securities Act of 1933, as amended ("U.S. Securities
Act"), and may not be offered or sold in the United States or to or for
the account or benefit of U.S. persons absent registration or an
applicable exemption from the registration requirements of the U.S.
Securities Act. This press release shall not constitute an offer to
sell or the solicitation of an offer to buy such securities in the
United States or in any other jurisdiction where such offer is
unlawful.
About Westaim and JEVCO
Westaim is a financial holding company focused on the property and
casualty insurance industry. Its subsidiary, JEVCO Insurance Company,
provides specialised insurance products to individuals, such as
recreational vehicles (motorcycles, snowmobiles and all-terrain
vehicles), and non-standard auto insurance as well as niche products in
business insurance. It operates mainly in Quebec, Ontario and Alberta.
Forward Looking Statements
Certain of the statements included in this press release about IFC's
current and future plans, expectations and intentions, results, levels
of activity, performance, goals or achievements or any other future
events or developments constitute forward-looking statements. 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.
Forward-looking statements are based on estimates and assumptions made
by management in light of our 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 IFC'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: IFC'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 IFC insurance subsidiaries
write; unfavourable capital market developments or other factors which
may affect IFC's investments 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; government regulations designed to protect policyholders and
creditors rather than investors; litigation and regulatory actions;
periodic negative publicity regarding the insurance industry; intense
competition; IFC's reliance on brokers and third parties to sell its
products to clients; IFC's ability to successfully pursue its
acquisition strategy; IFC's ability to execute its business strategy;
the terms and conditions of, and regulatory approvals relating to, the
acquisition JEVCO Insurance Company ("Acquisition"); timing for
completion of the Acquisition; synergies arising from, and IFC's
integration plans relating to the Acquisition; IFC's financing plans
for the Acquisition; management's estimates and expectations in
relation to MCT and debt to capital position, as applicable; various
other actions to be taken or requirements to be met in connection with
the Acquisition; IFC's participation in the Facility Association (a
mandatory pooling arrangement among all industry participants) and
similar mandated risk-sharing pools; terrorist attacks and ensuing
events; the occurrence of catastrophic events; IFC's ability to
maintain its financial strength and issuer credit ratings; IFC's
ability to alleviate risk through reinsurance; IFC's ability to
successfully manage credit risk (including credit risk related to the
financial health of reinsurers); IFC's reliance on information
technology and telecommunications systems; IFC's dependence on key
employees; general economic, financial and political conditions; IFC's
dependence on the results of operations of its subsidiaries; the
volatility of the stock market and other factors affecting IFC's share
price; and future sales of a substantial number of its common shares.
These factors are not intended to represent a complete list of the
factors that could affect us. These factors should, however, be
considered carefully. All of the forward-looking statements included in
this press release are qualified by these cautionary statements.
Although the forward-looking statements are based upon what management
believes to be reasonable assumptions, IFC cannot assure investors that
actual results will be consistent with these forward-looking
statements. When relying on forward-looking statements to make
decisions, investors should ensure the preceding information is
carefully considered. Such forward-looking statements are made as of
May 1, 2012. Undue reliance should not be placed on forward-looking
statements made herein. IFC and management have no intention and
undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise, except as required by law.
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