Canadian insurer Intact Financial said on Wednesday it would buy the commercial insurance business of British insurer Direct Line for an upfront payment of 520 million pounds ($650 million) to expand its British RSA unit.
The transaction will result in the transfer of renewal rights, brands, employees and systems to RSA.
“The transaction strengthens our position in the United Kingdom by doubling our activities in sectors where we are already strongest,” Charles Brindamour, Intact’s chief executive, said in a statement.
The terms of the transaction include the possibility of an additional contingent payment of up to £30 million, linked to the financial performance of the acquired business areas.
The Direct Line unit generated £530 million in written premiums in 2022 and had an average combined ratio of around 96% in 2021 and 2022, providing insurance to small business owners, landlords, as well as vans and fleets.
Intact is exploring strategic options for RSA’s personal lines business in the United Kingdom, including a possible sale, the company said.
The UK and the rest of the world account for about a fifth of Intact’s revenue.
($1 = 0.7997 pounds) (Reporting by Jaiveer Singh Shekhawat in Bengaluru and Nivedita Balu in Toronto; Editing by Sriraj Kalluvila)
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