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.
Source : RSA Press Release