UK-based RSA Insurance Group plc has announced the acquisition of GCAN Insurance Company, a Canadian mid-market, large risks & specialty commercial insurer, which “offers a range of products including Property, Liability and Motor [auto] with a balanced portfolio by line of business and province,” said the bulletin
RSA will pay consideration for the acquisition of CAD 420 million (£259 million [US$410.7 million]) in cash from internal resources.
“GCAN has a strong track record of profitability with a combined operating ratio (COR) of 81 percent and gross written premiums of CAD 255 million (£157 million [U.S.$248.72 million]) in 2009, and an average COR over the last five years of around 77 percent.”
RSA said the deal would make it the “fourth largest general insurer in Canada, with pro-forma gross written premiums for 2009 of approximately CAD 2.2 billion [US$2.15 billion] for the combined entity. Completion of the transaction is subject to regulatory approval.
“The acquisition of GCAN will strengthen RSA’s Commercial proposition by adding further technical expertise, geographic diversification and product breadth. The transaction will also drive significant additional reinsurance and capital benefits and other synergies.”
The announcement described GCAN’s capital position as “strong,” with a “Canadian Minimum Capital Test ratio of 384 percent as at 30 June 2010 compared to the market average of around 237 percent. The surplus capital in GCAN is estimated to be around CAD 110 million (£68 million [US$107.6 million]). The transaction is immediately accretive and will generate a return on investment in the mid-teens.”
Group CEO Andy Haste commented, “At RSA we have great businesses with strong market positions delivering excellent results. Over the last five years, RSA Canada has grown its premiums by around 60 percent and doubled its underwriting result. The acquisition of GCAN accelerates this momentum and takes us to number four in the market. This is a great deal for RSA Canada and the Group and we are excited about the strong potential of the combined business.”
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