Is Intact Financial Corporation planning some major acquisitions?
In his recent report, GMP Securities analyst Stephen Boland says demutualization should bring more consolidation into the Canadian P&C market: “We anticipate that the larger, mutual insurers will continue to work with the Department of Finance to demutualize in order to compete more effectively with the large stock P&C companies”, he adds, “We believe that other mutual insurers could demutualize which in turn may lead to a period of consolidation, similar to what occurred in the life insurance industry over a decade ago.”
In his report, Boland points out some of the likely players in the mergers and acquisitions arena, which includes Intact Financial Corporation and Westaim, which is the parent company of JEVCO Insurance Company. He goes on to say that Factory Mutual, Liberty Mutual, ACE INA, CAN Canada, Guarantee of North America, GCAN, Gore Mutual and Pembridge Insurance, are all potential targets for Intact Financial to acquire as it can easily afford to do so.
Westaim, on the other hand, could afford to purchase nearly 30 other insurers, including Echelon General, XL Insurance, Portage La Prairie and Allianz
Furthermore, according to Boland’s report, insurers that could be acquired, but would require more capital than is currently available, include: RSA Canada, The Economical, Chartis Canada, Zurich Canada, LIU Canada and Old Republic.
“Insurers that we believe have a strong possibility of being acquired are focused around the problematic financial health of the parent company,” Boland’s analysis states. “Five of the six insurers in this category have parent companies that have experienced operational issues or that may be exiting the Canadian marketplace.
“We believe AXA’s sale of AXA Canada is a recent example of a foreign firm raising capital by selling its Canadian operations.”
