Canada's Intact, Denmark's Tryg agree to buy British insurer RSA for $9.6 billion
By Iain Withers and Carolyn Cohn LONDON (Reuters) - Canada's Intact Financial and Denmark's Tryg on Wednesday said they had reached an agreement to buy British insurance group RSA for 7.2 billion pounds ($9.6 billion) in cash in one of Europe's biggest financial takeovers this year. Insurers have become an attractive proposition since the coronavirus crisis despite reputational damage from disputes over business interruption claims, industry sources say
By Iain Withers and Carolyn Cohn
LONDON (Reuters) - Canada's Intact Financial
Insurers have become an attractive proposition since the coronavirus crisis despite reputational damage from disputes over business interruption claims, industry sources say. Home-working has led to fewer claims on home and motor insurance while commercial insurance rates have risen sharply.
RSA's directors backed the Intact-Tryg bid unanimously and recommended shareholders vote in favour of the consortium's offer, the company said on Wednesday, having first flagged the approach early this month.
Best known in Britain for its More Than brand, RSA provides home, motor and commercial insurance and also has large operations in Canada, Ireland and Scandinavia.
RSA Chief Executive Stephen Hester told reporters he planned to step down after the deal's completion.
The deal "represents an excellent outcome for all of our constituencies", Hester said.
The former NatWest
The proposed takeover would result in the break-up of the British group. Intact would gain RSA's Canada, UK and international operations while Tryg would take the Sweden and Norway businesses. The pair would co-own RSA's Danish unit.
Intact CEO Charles Brindamour told reporters his company would invest in RSA's UK operations and that job losses in the UK and Canada would be capped at 2%.
His Tryg counterpart Morten Hubbe also told reporters job losses in Scandinavia would be relatively low, describing RSA's businesses there as "high quality".
Tryg would pay 4.2 billion pounds while Intact would contribute 3 billion pounds, with the overall offer representing a 51% premium to RSA's Nov. 4 closing share price of 460 pence.
Canadian pension funds Caisse de dépôt et placement du Québec, Canada Pension Plan Investment Board and Ontario Teachers' Pension Plan Board will contribute C$1.5 billion, C$1.2 billion and C$500 million respectively to Intact's payment, the company said in a statement https://www.newswire.ca/news-releases/intact-financial-corporation-announces-agreement-with-cornerstone-investors-to-finance-a-portion-of-the-purchase-price-of-the-possible-offer-for-rsa-insurance-group-plc-rsa--865615261.html last week.
KBW analysts called the deal "transformational" for Tryg.
Activist investor Cevian Capital, RSA's largest shareholder with a 14.9% stake, said it fully supports the takeover.
Industry sources said RSA had been seeking a buyer since a 5.6 billion pound bid from Zurich Insurance
Intact will put extra cash into those schemes, RSA's statement said.
The appetite for insurance deals has been growing. In August motor insurer Hastings
Intact shares rose 0.6% to C$676.80 in afternoon trading in Toronto. RSA shares closed up 4.7% in London, while Tryg ended the day down 5.1% in Copenhagen.
(Additional reporting by Nikolaj Skydsgaard in Copenhagen and Nichola Saminather in Toronto; Editing by Sinead Cruise and David Goodman)
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