{"id":21100,"date":"2023-12-11T18:31:34","date_gmt":"2023-12-11T18:31:34","guid":{"rendered":"https:\/\/www.insurance-canada.ca\/?p=79303"},"modified":"2023-12-11T18:31:34","modified_gmt":"2023-12-11T18:31:34","slug":"intact-financial-corporation-and-rsa-announce-sale-of-uk-direct-personal-lines-operations-to-admiral-group-plc","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2023\/12\/11\/intact-financial-corporation-and-rsa-announce-sale-of-uk-direct-personal-lines-operations-to-admiral-group-plc\/","title":{"rendered":"Intact Financial Corporation and RSA announce sale of UK direct Personal Lines operations to Admiral Group plc"},"content":{"rendered":"<ul type=\"disc\">\n<li>RSA to sell its UK direct Personal Lines (Home and Pet) operations following the recent conclusion of a strategic review<\/li>\n<li>RSA will also exit its Home and Pet partner and broker contracts in the UK, which completes its exit from the UK Personal Lines market<\/li>\n<li>Accelerates path to sustainable&nbsp;outperformance for the continuing UK&amp;I business, which is now expected to deliver a low-90s combined ratio<sup class=\"supscript\">[<a href=\"https:\/\/www.insurance-canada.ca\/2023\/12\/11\/intact-rsa-uk-operations-admiral-group\/#notes\">1<\/a>]<\/sup> in 2024<\/li>\n<li>No material impact expected to Net Operating Income Per Share (NOIPS)<sup class=\"supscript\">[<a href=\"https:\/\/www.insurance-canada.ca\/2023\/12\/11\/intact-rsa-uk-operations-admiral-group\/#notes\">2<\/a>]<\/sup><\/li>\n<\/ul>\n<p>Toronto, ON (Dec. 7, 2023) \u2013 Intact Financial Corporation and its subsidiary Royal &amp; Sun Alliance Insurance Limited (RSA) are pleased to announce that they have reached an agreement to sell RSA\u2019s UK direct Personal Lines operations, representing approximately \u00a3165 million of annual premiums,<sup class=\"supscript\">[<a href=\"https:\/\/www.insurance-canada.ca\/2023\/12\/11\/intact-rsa-uk-operations-admiral-group\/#notes\">3<\/a>]<\/sup> to Admiral Group&nbsp;plc (Admiral). The transaction will result in the transfer of renewal rights, brands and employees. RSA will retain the claims reserves, which will be run off over time.<\/p>\n<p>The sale has been approved by the Boards of Directors of both Intact and Admiral, and is expected to close at the end of Q1 2024.<\/p>\n<p>RSA will also exit its UK Home and Pet partner and broker contracts representing annual premiums of approximately \u00a3515 million,<sup class=\"supscript\">[<a href=\"https:\/\/www.insurance-canada.ca\/2023\/12\/11\/intact-rsa-uk-operations-admiral-group\/#notes\">3<\/a>]<\/sup> and is exploring options to either transfer these arrangements to other parties or let the contracts expire over time. This step completes RSA\u2019s exit of the UK Personal Lines market and marks the conclusion of the strategic review announced on <span class=\"xn-chron\">September 6, 2023<\/span>.<\/p>\n<p>The sale price for RSA\u2019s direct Home and Pet operations includes an initial cash consideration of \u00a382.5 million, with a potential additional payment of up to \u00a332.5 million, subject to the fulfilment of certain retention thresholds. In aggregate, the proceeds from the sale to Admiral and the release over time of capital backing the UK Personal Lines business are expected to total approximately \u00a3350 million, including the benefit of earnout provisions.<\/p>\n<p>\u201cThe exit from the UK personal lines market sharpens RSA\u2019s focus as a leading UK commercial and specialty lines player, accelerating our ability to deliver sustainable outperformance in the UK&amp;I segment,\u201d said <span class=\"xn-person\">Charles Brindamour<\/span>, Chief Executive Officer, Intact Financial Corporation.<\/p>\n<p><span class=\"xn-person\">Ken Norgrove<\/span>, Chief Executive Officer, RSA, added, \u201cWe recognize the important work of our Personal Lines colleagues in building RSA\u2019s leading Home and Pet businesses. I\u2019m confident that Admiral\u2019s shared values and track record in delivering excellence for customers makes them a perfect fit for our UK direct Personal Lines business. Our focus is on ensuring an orderly transition that supports our customers, colleagues and partners.\u201d<\/p>\n<p>Although it is exiting the UK Personal Lines market, RSA will continue to maintain its personal lines presence in <span class=\"xn-location\">Ireland<\/span>, where it is recognized as a leading provider of motor and home insurance, in addition to commercial insurance.<\/p>\n<h4 class=\"wcag-arialevel-3\" role=\"heading\" aria-level=\"3\"><b>Strong strategic rationale<\/b><\/h4>\n<ul type=\"disc\">\n<li>Exit of UK Personal Lines accelerates our ability to deliver outperformance in the UK&amp;I operations, consistent with Intact\u2019s objective to outperform wherever it operates.<\/li>\n<li>RSA will focus its resources on its leading Commercial and Specialty Lines platform, which has consistently been delivering low-90s combined ratios.<\/li>\n<li>RSA\u2019s technology investments will now be redirected to Commercial Lines, thereby accelerating the company\u2019s ability to modernize its platforms and build outperformance.<\/li>\n<li>Refocuses RSA\u2019s distribution model on brokered Commercial Lines, where the economics are more attractive.<\/li>\n<\/ul>\n<h4 class=\"wcag-arialevel-3\" role=\"heading\" aria-level=\"3\"><b>Financial impact<\/b><\/h4>\n<ul type=\"disc\">\n<li>Underwriting income (including any catastrophe losses) from UK Personal Lines will be reported in Exited Lines from Q4 2023 onward. The impact on NOIPS attributable to the exit of UK Personal Lines is not expected to be material.<\/li>\n<li>The overall exposure to UK Personal Lines will gradually diminish as approximately \u00a3680<sup class=\"supscript\">[<a href=\"https:\/\/www.insurance-canada.ca\/2023\/12\/11\/intact-rsa-uk-operations-admiral-group\/#notes\">3<\/a>]<\/sup> million of annual premiums run off starting in mid-2024.<\/li>\n<li>Approximately \u00a3240 million of capital is expected to be released over time, which will partly be used to reduce leverage. The pro forma adjusted debt-to-total capital ratio<sup class=\"supscript\">[<a href=\"https:\/\/www.insurance-canada.ca\/2023\/12\/11\/intact-rsa-uk-operations-admiral-group\/#notes\">4<\/a>]<\/sup> is expected to return to approximately 20% by the end of 2024, though release of capital is expected to continue beyond that date until both direct and partnership business is fully run off.<\/li>\n<li>RSA expects to incur costs related to the exit of UK Personal Lines over the next three years, the majority of which is non-cash. The ultimate amount of these costs is contingent on the nature and timing of the transfer of partnership arrangements. Proceeds from the sale of UK direct Personal Lines are expected to mostly offset these costs.<\/li>\n<li>The impact on book value per share (BVPS)<sup class=\"supscript\">[<a href=\"https:\/\/www.insurance-canada.ca\/2023\/12\/11\/intact-rsa-uk-operations-admiral-group\/#notes\">5<\/a>]<\/sup> is not expected to be material.<\/li>\n<\/ul>\n<h4 class=\"wcag-arialevel-3\" role=\"heading\" aria-level=\"3\"><b>Additional details related to the UK Personal Lines exit<\/b><\/h4>\n<ul type=\"disc\">\n<li>The sale of RSA\u2019s direct Personal Lines operations in the UK entails the transfer of the new business franchise and certain operations, brands, employees, data and renewal rights to Admiral, with the transfer expected to take place at the end of Q1 2024.<\/li>\n<li>The transfer of policies will be completed through a renewal migration over 12 months expected to start from Q3 2024, minimizing impact on customers.<\/li>\n<li>Around 300 RSA employees will move to Admiral to provide ongoing support and service delivery.<\/li>\n<li>RSA is exploring options to transfer to other parties its Home and Pet partner and broker contracts, which will otherwise expire over the next two to three years. RSA will work closely with partners and brokers to ensure a smooth transition process.<\/li>\n<li>RSA will retain the claims reserves related to all of its UK Personal Lines business, which have recorded favourable prior-year development over the last two years.<\/li>\n<\/ul>\n<h4 class=\"wcag-arialevel-3\" role=\"heading\" aria-level=\"3\"><b>Outlook for the continuing UK&amp;I business<\/b><\/h4>\n<p>On <span class=\"xn-chron\">October 26, 2023<\/span>, Intact and RSA completed the acquisition of Direct Line\u2019s brokered Commercial Lines operations, representing annual written premiums of approximately \u00a3530 million. This transaction significantly strengthened RSA\u2019s outperforming Commercial Lines business.<\/p>\n<ul type=\"disc\">\n<li>Following the subsequent exit of UK Personal Lines, Intact\u2019s continuing UK&amp;I operations are expected to generate \u00a32.8 billion of premiums in 2024, representing approximately 20% of IFC direct premiums written.<\/li>\n<li>Approximately 95% of UK&amp;I direct premiums written will be attributable to Commercial and Specialty Lines, with the remainder coming from Personal Lines in <span class=\"xn-location\">Ireland<\/span>.<\/li>\n<li>The pro forma UK&amp;I combined ratio is expected to be in the low 90s in 2024. This is expected to improve by approximately 2 points in the subsequent 12 to 24 months through both loss and expense ratio synergies related to the Direct Line acquisition.<\/li>\n<li>The Direct Line brokered Commercial Lines transaction is expected to generate an IRR<sup class=\"supscript\">[<a href=\"https:\/\/www.insurance-canada.ca\/2023\/12\/11\/intact-rsa-uk-operations-admiral-group\/#notes\">6<\/a>]<\/sup> in excess of 15%.<\/li>\n<\/ul>\n<h4 class=\"wcag-arialevel-3\" role=\"heading\" aria-level=\"3\"><b>Advisers<\/b><\/h4>\n<p>J.P. Morgan Securities plc is acting as financial adviser to Intact Financial Corporation. Skadden, Arps, Slate, Meagher &amp; Flom LLP is acting as legal adviser to Intact Financial Corporation in this transaction.<\/p>\n<h4 class=\"smallhead\">Notes<\/h4>\n<p>1. Combined ratio is a non-IFRS ratio, which does not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures used by other companies in our industry. It is the sum of (i) claims ratio (which is a non-IFRS ratio which represents operating net claims divided by operating net underwriting revenues) and (ii) expense ratio (which is a non-IFRS ratio which represents operating net underwriting expenses divided by operating net underwriting revenues. See Non-IFRS measures at the end of this press release.<\/p>\n<p>2. NOIPS is a non-IFRS ratio, which does not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures used by other companies in our industry. It is calculated by dividing net operating income attributable to common shareholders, divided by the weighted-average number of common shares outstanding on a daily basis during a specific period. Net operating income attributable to common shareholders is a non-IFRS measure which represents the net income attributable to shareholders, excluding the after-tax impact of non-operating results, net of net income (loss) attributable to non-controlling interests (non-operating component), preferred share dividends and other equity distributions. See Non-IFRS measures at the end of this press release.<\/p>\n<p>3. 2022 annual premiums, restated under IFRS 17<\/p>\n<p>4. Adjusted debt-to-total capital ratio is a non-IFRS ratio, which does not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures used by other companies in our industry. It is calculated using debt outstanding (excluding hybrid debt) divided by adjusted total capital. See Non-IFRS measures at the end of this press release.<\/p>\n<p>5. BVPS is a supplementary financial measure, which does not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures used by other companies in our industry. It is calculated by dividing common shareholders\u2019 equity by the number of common shares outstanding. See Non-IFRS measures at the end of this press release<\/p>\n<p>6. IRR is the discount rate that makes the net present value of all cash flows equal to zero in a discounted cash flow analysis.<\/p>\n<h4 class=\"smallhead\"><b>About Intact Financial Corporation <\/b><\/h4>\n<p>Intact Financial Corporation <em>(TSX: IFC)<\/em> is the largest provider of property and casualty (P&amp;C) insurance in Canada, a leading provider of global specialty insurance, and, with RSA, a leader in the U.K. and Ireland. Our business has grown organically and through acquisitions to over $21 billion of total annual premiums. In Canada, Intact distributes insurance under the Intact Insurance brand through a wide network of brokers, including its wholly-owned subsidiary BrokerLink, and directly to consumers through belairdirect. Intact also provides affinity insurance solutions through the Johnson Affinity Groups. In the U.S., Intact Insurance Specialty Solutions provides a range of specialty insurance products and services through independent agencies, regional and national brokers, and wholesalers and managing general agencies. Outside of North America, the Company provides personal, commercial and specialty insurance solutions across the U.K., Ireland, Europe and the Middle East through the RSA brands. For more information, visit <a href=\"http:\/\/www.intactcf.com\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">www.intactcf.com<\/a>.<\/p>\n<h4 class=\"smallhead\"><b>About RSA Insurance<\/b><\/h4>\n<p>RSA Insurance is a multinational insurance group. We are one of the world\u2019s oldest general insurers, providing peace of mind to individuals and protecting small businesses and large organisations from uncertainty. We use our capabilities to anticipate and improve outcomes for customers via our direct channel, our strong broker relationships or partner organisations. We have established businesses in the UK, Ireland and continental Europe.<\/p>\n<p>In 2021, the former <a title=\"Read the press release, \u201cIntact and Tryg complete acquisition of RSA Group\u201d\" href=\"https:\/\/www.insurance-canada.ca\/2021\/06\/03\/intact-financial-tryg-complete-acquisition-rsa-group\/\">RSA Group Plc came under new ownership<\/a> and is now a wholly-owned subsidiary of Intact Financial Corporation.<\/p>\n<p>For more information, visit <a href=\"https:\/\/www.rsainsurance.co.uk\/\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">www.rsainsurance.co.uk<\/a>.<\/p>\n<h4 class=\"smallhead\"><b>About Admiral Group plc<\/b><\/h4>\n<p>Admiral Group is a leading FTSE100 Financial Services company with businesses in the UK, <span class=\"xn-location\">Europe<\/span> and the US. Established in 1993 as a car insurance specialist in the UK, it has expanded into other countries and products such as household, travel and pet insurance, as well as personal lending products.<\/p>\n<h4 class=\"smallhead\"><b>About CDPQ<\/b><\/h4>\n<p>CDPQ is a global investment group managing funds for public pension and insurance plans. It invests constructively to generate sustainable returns over the long term, working alongside partners to build enterprises that drive performance and progress. It is active in the major financial markets, private equity, infrastructure, real estate and private debt.<\/p>\n<h4 class=\"smallhead\"><b>Forward-Looking Statements<\/b><\/h4>\n<p class=\"referencetextnoital\">Certain statements made in this press release are forward-looking statements. These statements include, without limitation, on a per share basis and by line of business: statements relating to claims, catastrophe losses and non-catastrophe losses, their origin and geographic location, the anticipated effect on performance and combined ratio and the anticipated effect of applicable and future tax regulations. All such forward-looking statements are made pursuant to the \u2018safe harbour\u2019 provisions of applicable Canadian securities laws.<\/p>\n<p class=\"referencetextnoital\"><span class=\"ContentPaneDiv\"><span class=\"ContentPaneDiv1\">Forward-looking statements are based on estimates and assumptions made by management based on management\u2019s experience and perception of historical trends, current conditions and expected future developments, as well as other factors that management believes are appropriate in the circumstances. Many factors could cause the Company\u2019s actual results, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements. In the case of estimated claims and losses, due to the preliminary nature of the information available to prepare estimates, future estimates and the actual amount and categorization of claims and losses associated with events described above may be materially different from current estimates<\/span><\/span>.<\/p>\n<p class=\"referencetextnoital\">All of the forward-looking statements included in this press release are qualified by these cautionary statements and those made in the \u201cRisk Management\u201d sections of our Q1-2023 Management\u2019s Discussion and Analysis (Sections 21-22), and our Management\u2019s Discussion and Analysis for the year ended December 31, 2022 (Sections 30-34), in Notes 10 and 13 of our Consolidated Financial Statements for the year ended December 31, 2022 and in our Annual Information Form dated February 7, 2023, all of which are available on our web site at www.intactfc.com or on SEDAR at www.sedar.com. These factors are not intended to represent a complete list of the factors that could affect the Company. These factors should, however, be considered carefully. Although the forward-looking statements are based upon what management believes to be reasonable assumptions, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. When relying on forward-looking statements to make decisions, investors should ensure the preceding information is carefully considered. Undue reliance should not be placed on forward-looking statements made in this press release. The Company has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.<\/p>\n<h4 class=\"smallhead\"><b>Disclaimer<\/b><\/h4>\n<p class=\"referencetextnoital\">This press release does not constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for any securities nor shall it or any part of it form the basis of or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever.<\/p>\n<p class=\"referencetextnoital\">The information contained in this press release concerning the Company does not purport to be all-inclusive or to contain all the information that an investor may desire to have in evaluating whether or not to make an investment in the Company. The information is qualified entirely by reference to the Company\u2019s publicly disclosed information and the cautionary note regarding forward-looking statements included in this press release.<\/p>\n<p class=\"referencetextnoital\">No securities regulatory authority has either approved or disapproved the contents of this press release. The common shares to be issued pursuant to the Offering and over-allotment option have not been, and will not be, registered under the U.S. Securities Act, or any state securities laws. Accordingly, the common shares may only be offered or sold within the United States pursuant to exemptions from the registration requirements of the U.S. Securities Act and applicable state securities laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the common shares in any jurisdiction in which such offer, solicitation or sale would be unlawful.<\/p>\n<p class=\"referencetextnoital\">Any website address included in this press release is an inactive textual reference only and information appearing on such website is not part of, and is not incorporated by reference in, this press release.<\/p>\n<p class=\"referencetextnoital\">J.P. Morgan Securities plc (\u201cJ.P. Morgan\u201d), which is authorised in the UK by the Prudential Regulation Authority (the \u201cPRA\u201d) and regulated in the UK by the PRA and the Financial Conduct Authority, is acting as financial adviser exclusively for Intact and its affiliates and no one else in connection with the transaction and will not regard any other person as a client in relation to the transaction and will not be responsible to anyone other than Intact and its affiliates for providing the protections afforded to clients of J.P. Morgan or its affiliates, nor for providing advice in relation to the transaction or any other matters referred to in this announcement.<\/p>\n<h4 class=\"smallhead\"><b>Non-IFRS Measures<\/b><\/h4>\n<p class=\"referencetextnoital\">The Company uses both International Financial Reporting Standards (IFRS) and certain non-IFRS measures to assess performance.<\/p>\n<p class=\"referencetextnoital\">Non-IFRS financial measures and non-IFRS ratios (which are calculated using non-IFRS financial measures) do not have standardized meanings prescribed by IFRS and may not be comparable to similar measures used by other companies. They are used by management to assess the Company\u2019s performance.<\/p>\n<p class=\"referencetextnoital\">Supplementary financial measures, non-IFRS financial measures and non-IFRS ratios used in this press release and the Company\u2019s financial reports include NOIPS, operating ROE, BVPS, combined ratio, claims ratio, expense ratio, GWP, DPW, and adjusted debt-to-total capital ratio.<\/p>\n<p class=\"referencetextnoital\">For more information about these supplementary financial measures, non-IFRS financial measures and non-IFRS ratios, including definitions and explanations of how these measures provide useful information, refer to Section 21 \u2013 Non-GAAP and other financial measures in the Company\u2019s Q2-2023 Management\u2019s Discussion and Analysis dated August 2, 2023, which Section is incorporated by reference into this press release and which is available on the Company\u2019s website at <u>www.intactfc.com<\/u> and on SEDAR+ at <u>www.sedarplus.ca<\/u>.<\/p>\n<p class=\"referencetext\"><em>Source: Intact Insurance Specialty Solutions<\/em><\/p>\n<p> Tags: <a href=\"https:\/\/www.insurance-canada.ca\/tag\/acquisition\/\" rel=\"tag\">Acquisition<\/a>, <a href=\"https:\/\/www.insurance-canada.ca\/tag\/intact\/\" rel=\"tag\">Intact<\/a>, <a href=\"https:\/\/www.insurance-canada.ca\/tag\/personal-lines\/\" rel=\"tag\">personal lines<\/a>, <a href=\"https:\/\/www.insurance-canada.ca\/tag\/rsa\/\" rel=\"tag\">RSA<\/a>, <a href=\"https:\/\/www.insurance-canada.ca\/tag\/united-kingdom-uk\/\" rel=\"tag\">United Kingdom (UK)<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>RSA to sell its UK direct Personal Lines (Home and Pet) operations following the recent conclusion of a strategic review RSA will also exit its Home and Pet partner and broker contracts in the&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[1],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/21100"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=21100"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/21100\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=21100"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=21100"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=21100"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}