Intact completes AXA acquisition

AXA life insurance to be sold to SSQ for $300 million.

Intact Financial Corporation has completed its $2.6 billion acquisition of AXA Canada, the 6th largest provider of home, auto and business insurance in the country.

“The benefits of combining the knowledge, competencies and talent of two best-in-class P&C insurers are compelling,” said Charles Brindamour, CEO at Intact. “We will strengthen our product offerings, improve our capabilities to support insurance brokers, expand our distribution platform, reinforce competencies in risk selection and deepen the quality of our management team.”

For the past three months, Intact and AXA have been working together to review activities, processes and systems, and to develop prospective action plans. Since the integration planning is nearly complete, Intact anticipates a smooth transition and expects to reap the benefits of the transaction as the formal integration starts in earnest.

Intact has appointed Louis Gagnon to the position of president and COO of Intact Financial Corporation and Jean-Francois Blais to the position of president of Intact Insurance. Both will report directly to the CEO.

Upon completion of the integration, Intact will enhance its leading position in Canada by increasing its market share to approximately 16.5% and its premiums to $6.5 billion.

Since the announcement of the planned acquisition in May, Intact has secured long-term financing at attractive rates, despite a volatile capital market environment. The $2.6 billion acquisition has been financed with the proceeds from the issuance of subscription receipts, preferred shares and medium term notes in an aggregate amount of approximately $1.8 billion. The balance was funded from Intact’s excess capital and $400 million drawn down under the terms of a credit facility arranged in connection with the acquisition.

Intact to sell AXA’s life insurance business

Additionally, IFC has entered into a definitive share purchase agreement to sell AXA Canada’s life insurance business to SSQ, Life Insurance Company Inc. with the financial support of its majority shareholder, the Fonds de solidarite FTQ, for $300 million. The transaction is conditional on the receipt of regulatory approvals and is expected to close in early 2012.

AXA Life Insurance, a subsidiary of AXA Canada, was acquired by Intact as part of the acquisition. AXA Life Insurance, which has approximately 250 employees, offers health and life insurance products through a vast network of agents. In 2010, AXA Life Insurance premiums amounted to $169 million.

“Given our focus on home, auto and business insurance, it was important for us to identify a prospective acquirer that would pursue with success the activities of AXA Life Insurance and offer the best value proposition to its employees, distribution partners and customers,” added Brindamour. “We have found in SSQ Financial Group a strong operator and are confident that the transaction will be most beneficial to all AXA Life Insurance stakeholders.”

Intact intends to use the proceeds from this transaction to repay the term loan facility used to partially finance the acquisition of AXA Canada. As a result, the debt to total capital ratio of Intact is expected to be back in line with its target of 20% once the transaction closes.

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