Intact Financial has agreed to acquire US-based specialty insurer OneBeacon Insurance for $1.7bn.
Under the terms of the agreement, the Canadian property and casualty insurer will pay $18.10 for each of the common shares held by the OneBeacon Insurance shareholders in the company.
Also, the debt of OneBeacon, which totals to about $275m, will remain outstanding as per the agreement terms.
Intact Financial expects the acquisition and merger of OneBeacon to create a leading North American specialty insurance company with annual premiums of more than $2bn.
Intact Financial CEO Charles Brindamour said the combined North American specialty lines insurer will focus on small to mid-sized businesses.
Brindamour said: “OneBeacon is a strong strategic fit for Intact, with deep expertise in commercial and specialty lines, and shared values. We see significant growth potential from the combination of our specialty lines operations and we look forward to welcoming OneBeacon employees to the Intact family.”
The acquisition will integrate the commercial lines track record and deep data, claims and digital expertise of Intact Financial with the high caliber personnel and specialty lines capabilities of OneBeacon.
It will also consolidate the Canadian business of Intact Financial with the addition of new product offerings along with cross-border capabilities. Intact Financial also expects to be better placed following the merger to compete against global insurance firms.
The Canadian insurer further stated that the combination with OneBeacon will also create an additional growth pipeline to leverage on its own consolidation expertise in the fragmented specialty lines market.
OneBeacon Insurance CEO Mike Miller said: “The opportunity to leverage Intact’s deep technical, financial and technology capabilities makes this combination the perfect next step in the OneBeacon journey.
“Together, we will accelerate our pursuit in creating a leading specialty insurer in North America. We look forward to working with our US and Canadian independent agents and brokers to deliver market-leading capabilities to our targeted customers.”
The transaction has been approved by the two companies’ board of directors. It also has the support of the White Mountains Insurance Group which is the controlling stakeholder in OneBeacon Insurance.
Subject to customary closing conditions, the transaction is likely to be closed in the fourth quarter of the year.
Image: Intact Financial and OneBeacon Insurance to merge in a $1.7bn deal. Photo: courtesy of adamr/ FreeDigitalPhotos.net.