4th Oct 2010 15:03
Acquisition
RSA acquires GCAN Insurance in Canada
RSA Insurance Group plc (RSA) announces the acquisition of GCAN Insurance Company (GCAN).
GCAN is a leading Canadian mid-market, large risks & specialty commercial insurer, offering a range of products including Property, Liability and Motor with a balanced portfolio by line of business and province. GCAN has a strong track record of profitability with a combined operating ratio (COR) of 81% and gross written premiums of CAD 255m (GBP 157m) in 2009, and an average COR over the last five years of around 77%.
With this transaction, RSA will become the fourth largest general insurer in Canada, with pro-forma gross written premiums for 2009 of approximately CAD 2.2bn for the combined entity. 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.
On completion, RSA will pay consideration of CAD 420m (GBP 259m) in cash from internal resources. GCAN has a strong capital position, with a Canadian Minimum Capital Test ratio of 384% as at 30 June 2010 compared to the market average of around 237%. The surplus capital in GCAN is estimated to be around CAD 110m (GBP 68m). The transaction is immediately accretive and will generate a return on investment in the mid-teens.
Andy Haste, Group CEO, 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% 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."
Completion of the transaction is subject to regulatory approval.
-ENDS
For further information:
| Analysts | Press | ||||||
| Claire Cordell | Louise Shield | ||||||
| Tel: +44 (0) 20 7111 7212 | Tel: +44 (0) 20 7111 7047 | ||||||
| Mob: +44(0) 7834 944 204 | Mob: +44(0) 7786 114 662 | ||||||
| Suzannah Oliver | Simon Kutner | ||||||
| Tel: +44 (0) 20 7111 7140 | Tel: +44 (0) 20 7111 7327 | ||||||
| Mob: +44(0) 7827 843 749 | Mob: +44 (0) 7795 445 656 |
Notes to editors:
1. As at 30 June 2010 GCAN had gross assets of CAD 904m (GBP 558m), net assets of CAD 238m (GBP 147m) and tangible net assets of CAD 238m (GBP 147m).
2. For the year ended 31 December 2009, GCAN generated gross written premiums of CAD 255m (GBP 157m), net written premiums of CAD 161m (GBP 99m), a combined operating ratio of 81%, profits before tax of CAD 43m (GBP 27m) and profits after tax of CAD 28m (GBP 17m). All numbers are quoted on a Canadian GAAP basis.
3. GCAN Insurance Company (GCAN) is a wholly owned subsidiary of Glenstone Capital Incorporated and both companies are included within this transaction.
4. Integration costs are estimated at around CAD 20m (GBP 12m), with the majority expected to be incurred in the first year.
5. GCAN's assets, premiums and profits were converted using an exchange rate of GBP 1: CAD 1.62.
About RSA
With a 300 year heritage, RSA is one of the world's leading multinational quoted insurance groups. RSA has major operations in the UK, Scandinavia, Canada, Ireland, Asia and the Middle East, Latin America and Central and Eastern Europe and has the capability to write business in over 130 countries. Focusing on general insurance, RSA has around 23,000 employees and, in 2009, its net written premiums were £6.7 billion.
About RSA Canada
RSA is currently the 5th largest insurer in Canada and is one of the fastest growing and most profitable companies in the market, with net written premiums of over £1bn and a combined operating ratio of 93.5% for the full year 2009. It operates in the intermediated channel through the RSA brand and is the second largest insurer of Affinity groups through Johnson, its leading direct operation. RSA Canada has around 3,400 employees and is represented by a large network of brokers across the country.
About GCAN
GCAN Insurance Company (GCAN) is a wholly owned subsidiary of Glenstone Capital Incorporated, a portfolio company of Teachers' Private Capital, the private equity department of Ontario Teachers' Pension Plan Board. GCAN is a Canadian commercial property and casualty insurer with offices in Toronto, Montreal, Calgary, and Vancouver. Through a national network of independent brokers, it provides a range of Commercial insurance products including Property, Liability and Motor. For more than 50 years, GCAN has been a trusted name in the Canadian insurance marketplace, and has a strong reputation built on providing flexible innovative solutions and exceptional customer service.
Important Disclaimer
This press release may contain 'forward-looking statements' with respect to certain of the Group's plans and its current goals and expectations relating to its future financial condition, performance results, strategic initiatives and objectives. Generally, words such as "may", "could", "will", "expect", "intend", "estimate", "anticipate", "aim", "outlook", "believe", "plan", "seek", "continue" or similar expressions identify forward-looking statements. These forward-looking statements are not guarantees of future performance. By their nature, all forward-looking statements are inherently predictive and speculative and involve risk and uncertainty because they relate to future events and circumstances which are beyond the Group's control, including amongst other things, UK domestic and global economic business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities, the impact of competition, inflation, deflation, the timing impact and other uncertainties of future acquisitions or combinations within relevant industries, as well as the impact of tax and other legislation and other regulations in the jurisdictions in which the Group and its affiliates operate. As a result, the Group's actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in the Group's forward-looking statements. Forward-looking statements in this press release are current only as of the date on which such statements are made. The Group undertakes no obligation to update any forward-looking statements, save in respect of any requirement under applicable law or regulation. Nothing in this press release shall be construed as a profit forecast.
Copyright Business Wire 2010
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