RSA agrees £7.2bn takeover by two overseas insurers

RSA agrees £7.2bn takeover by two overseas insurers

RSA, the 300-year old insurer that owns the More Than brand, has agreed a £7.2bn takeover from two overseas insurers that will result in the breakup of one of the FTSE 100’s oldest companies.

The board of the London-headquartered company has accepted an all-cash offer from the Canadian insurer Intact Financial Corporation and the Nordic insurer Tryg.

Under the terms of the deal, Tryg will pay £4.2bn and take over RSA’s Swedish and Norwegian businesses, and Intact will pay £3bn to buy RSA’s Canadian, UK and Ireland and international operations. The two companies will co-own RSA’s Danish business. RSA shareholders will also receive a preannounced interim dividend of 8p per share, worth about £82m.

RSA’s Danish business will be managed by Intact while it explores strategic options for the business, including a sale or stock market floatation.

“The board of RSA is pleased to be recommending Intact and Tryg’s cash offer for the company, which delivers attractive, certain value for shareholders,” said Martin Scicluna, the chairman of RSA.

“RSA has provided peace of mind to individuals and protected businesses from risk for more than 300 years. However, I am confident that the values of our business, and not least our dedication to serving customers well, will be sustained as part of Intact and Tryg.”

RSA, which employs 12,400 people, has been run by the former RBS chief executive Stephen Hester since 2014, when he joined after the company discovered problems in its Irish business. Hester strengthened the balance sheet with a £773m rights issue and sold some of RSA’s international businesses.

In 2018, the company also experienced problems at its commercial insurance operation. RSA has been the subject of takeover speculation in recent years, with rumours of a potential linkup with Aviva, which is a major player in the Canada and the UK.

RSA was formed in 1996 through the merger of Sun Alliance with Royal Insurance. The original Sun Insurance company was founded in 1706 and its successors have provided home insurance to people such as the explorer Capt James Cook and Charles Darwin.

The company still offers personal and commercial insurance products, as well as the underwriting of home insurance for brands such as John Lewis and pet insurance for Argos and Tesco.

UK insurers have been the subject of increased takeover activity recently.

In August, Hastings accepted a £1.7bn bid from the Finnish insurer Sampo and South Africa’s Rand Merchant. Germany’s Allianz bought general insurance businesses from LV and Legal & General.

Intact, the largest provider of property and casualty insurance in Canada with more than 16,000 employees across its international business, said the RSA takeover marks its eighth deal since 2010.

Tryg is one of the biggest insurance companies in the Nordic region, with activities in Denmark, Norway and Sweden.

SOURCE