Intact Financial Corporation has announced that it has entered into an agreement with Princeton Holdings Limited to acquire The Guarantee Company of North America (The Guarantee) and Frank Cowan Company Limited.
The cash consideration for the acquisitions is approximately $1 billion, and the transaction is expected to close in the fourth-quarter of 2019, subject to regulatory approval.
The Guarantee is a specialty lines insurer in Canada and the U.S., and the acquisition bolsters Intact’s position in Canada and adds new products from the high net worth customer segment. At the same time, it advances the company’s North American specialty lines platform, and will contribute to additional distribution-related earnings.
The Guarantee adds more than $560 million in gross written premiums, including over $100 million in the U.S., which brings Intact’s annual North American specialty lines direct premiums to almost $3 billion.
Frank Cowan Company Limited is a managing general agent (MGA) that provides specialised insurance programmes to public entities across Canada. The firm places business with a number of insurers, including The Guarantee.
Following the transaction, Princeton Holdings will retain full ownership of its other businesses: Cowan Insurance Group, Cowan Asset Management, and Fountain Street Finance.
Charles Brindamour, Chief Executive Officer (CEO), Intact, said: “The acquisition of The Guarantee Company of North America and Frank Cowan Company is strongly aligned with our strategic and financial objectives. We are delivering on our objectives to grow in Canada and build a leading North American specialty platform. I’m enthusiastic about what we will accomplish by leveraging the combined expertise of our teams and our expanded offering.”
Maureen Cowan, Chairman of the Board, Princeton Holdings, added: “The Guarantee Company of North America and Frank Cowan Company have built a strong customer-focused specialty and personal lines business over almost 150 years, of which we are very proud. After careful consideration, we believe that combining our strong customer focus and the expertise of our employees in specialty lines and surety, with Intact’s resources, in particular its advanced analytics capabilities, provides tremendous opportunities for the combined entities to leverage one another’s strengths to build an outstanding, Canadian owned, North American specialty insurer.”
Intact has said that it expects the deal to generate a return on capital that is above its threshold and expects the acquisition to be immediately accretive to net operating income per share.