Canada’s Intact Financial Completes OneBeacon Acquisition; Vows to Grow Specialty Insurer

Intact Financial Corp. said it has completed its acquisition of U.S. specialty insurer OneBeacon Insurance Group from Bermuda-based White Mountains Insurance Group. The purchase price was C$2.3 billion (US$1.7 billion).

Toronto-based IFC said the deal makes it a leading provider of specialty insurance in North America with more than C$2 billion in combined annual premiums focusing on small to midsize businesses.

The parties announced their intention to merge in May.

“The completion of this transaction represents a defining milestone in our history and our journey to build a world-class P&C insurer by combining Intact’s leading commercial lines track record and deep data, claims and digital expertise with OneBeacon’s high caliber team and specialty lines capabilities,” said Charles Brindamour, chief executive officer of IFC.

The company said its objective is to grow the new specialty lines businesses in the U.S. and operate at a combined ratio in the low 90s within 24-36 months.

The combined specialty organization will be led by Mike Miller, former CEO of OneBeacon Insurance. Miller will join IFC’s executive team as president, U.S. and Specialty Solutions, and report to Brindamour.

The acquired company will continue to operate as OneBeacon Insurance Group in the U.S. and Intact will continue to offer specialty products under the Intact Specialty Solutions brand in Canada.

The U.S. principal offices for OneBeacon will remain in Plymouth, Minn. and OneBeacon’s offices in Boston and all other U.S. locations will “remain fully operational,” according to spokesperson, Carmen Duarte, director of communications for OneBeacon. Layoffs are not anticipated as it will be “a seamless transition, with the same teams going forward,” Duarte told Insurance Journal.

Combination

The deal combines Intact’s commercial lines track record and data, claims and digital capabilites with OneBeacon’s specialty lines capabilities. Intact said the acquisition bolsters its Canadian business with new products and cross-border capabilities, and better positions it to compete with international insurers. Intact expects to also benefit from top and bottom line growth opportunities resulting from broader geographic and line of business diversification.

Intact has about a 17 percent share of Canada’s $47 billion home, auto and business insurance market. It sells through brokers as well as directly via the Internet and call centers. Intact’s US$628 million in specialty business includes trucking, farm, professional and management liability, equipment breakdown, auto and other risks. Its specialty business is eight percent of its entire book of business that includes commercial (24 percent) as well as personal auto (44 percent) and personal property (24 percent) business.

OneBeacon reported US$1.2 billion in gross written premium and net income of US$107 million in 2016, along with a 2016 combined ratio of 97.3. It writes specialty coverages for technology, healthcare, government, entertainment, financial services, ocean marine and other risks.

IFC and OneBeacon said they have been working together for the past several months to review each organization’s activities, processes and systems. In the fourth quarter, Intact will start offering OneBeacon’s specialty products and services in Canada, beginning with technology and entertainment risks.

New capabilities will provide coverages for all lines of business for technology risks including third-party cyber and professional liability for manufacturers of electronics, software and IT service providers, and the telecommunications industry. For the entertainment industry, OneBeacon will offer commercial insurance for motion picture, television and documentary film makers, as well as for businesses associated with the motion picture and television industry.

Cross-Border Offerings

Intact said it has established a cross-border facility to better serve its Canadian-based customers with U.S. exposure, and its U.S. based OneBeacon customers with Canadian exposure.

“This seamless cross-border experience and broader geographic footprint will strengthen our ability to compete with other large international insurers,” said Brindamour.

IFC is the largest provider of property/casualty insurance in Canada and a provider of specialty insurance in North America, with close to $10 billion in total annual premiums. The company has 13,000 full- and part-time employees. In Canada, Intact distributes insurance under the Intact Insurance brand through a network of brokers, including its wholly-owned subsidiary BrokerLink, and directly to consumers through belairdirect.

In the U.S., OneBeacon Insurance Group, a wholly-owned subsidiary, provides specialty insurance products through independent agencies, brokers, wholesalers and managing general agencies.

Insurers’ Histories

In the 1980s the Canadian insurer acquired three regional insurers – Commerce Group and Belair in Quebec, and Western Union in Alberta. In 1991, it brought all of its insurance companies under the umbrella of ING Canada.

Its growth continued with the acquisition of Guardian Insurance’s business in Canada in 1998, followed by the acquisition of Zurich Canada’s home, auto and small and medium business insurance portfolio in 2001. In 2004 it acquired Allianz Canada. That was soon followed with an initial public offering and the start of trading on the Toronto Stock Exchange with ING Group retaining 70 percent ownership. In 2009 the name was changed to Intact Financial Corp. More recently Intact acquired AXA Canada, the sixth largest property/casualty insurance company in the country.

OneBeacon was formed in 2001 when White Mountains Insurance Group Ltd. acquired the former CGU’s U.S. property/casualty business from Aviva. In 2006, White Mountains sold 27.6 million of OneBeacon’s common shares in an initial public offering, or 27.6 percent of OneBeacon’s common shares at the time of the initial public offering. As of May 2, 2017, White Mountains owned 75.7 percent of OneBeacon’s common shares, representing 96.9 percent of the voting power.

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