TORONTO (Reuters) - Intact Financial Corp (IFC.TO) will buy Jevco Insurance Co from Westaim Corp WED.TO for C$530 million ($538.5 million) to expand its already major presence in the Canadian property and casualty insurance sector.
Toronto-based Intact, which has been an acquisition leader in an industry that is facing fast consolidation, said on Wednesday that 48.6 percent of Westaim shareholders have agreed to vote for the deal.
Westaim, a Toronto-based holding company, bought Jevco from insurer Kingsway Financial Services Inc (KFS.TO) in 2010.
Jevco insures cars, motorcycles, and recreational vehicles such as snowmobiles and all-terrain vehicles. It had about C$350 million in direct premiums in 2011.
"The acquisition will allow us to expand our offering to brokers by providing them the opportunities to offer their clients complementary specialized products such as recreational vehicle insurance," Intact Chief Executive Charles Brindamour said in a statement.
Intact intends to finance the acquisition with an existing line of credit and through a bought deal to issue subscription receipts that is worth about C$226 million.
It has entered into an agreement with a group of underwriters, led by CIBC World Markets and TD Securities, to issue 3.6 million subscription receipts at C$62.75 each.
Intact, which was formerly the Canadian insurance arm of ING Groep, has already been busy on the acquisitions front, buying the Canadian operations of French insurer AXA last year for C$2.6 billion.
Analysts have predicted a fast pace of takeovers in Canada's fragmented P&C insurance industry as foreign players sell off their Canadian subsidiaries to boost capital levels.
Signs that the Canadian government may move to allow policy-holder owned insurers to demutualize could increase the number of attractive targets.
Brindamour told Reuters in March that Intact would seek deals both to build on its 17 percent Canadian market share, and possibly to push into international markets.
Intact, which sells insurance under the Belair Direct and Grey Power banners, was a top performer among Canadian financial stocks last year with a 15 percent rise.
The shares have continued to gain this year, with a 9 percent gain so far, and were up 81 Canadian cents, or 1.3 percent, at C$64.19 at mid-morning on Wednesday.
The stock was also likely getting a boost from a stronger-than-expected profit reported by Intact late on Tuesday.
The company said first-quarter operating profit rose 75 percent due to a large jump in premiums courtesy of the AXA acquisition.
Reporting By Cameron French, additional reporting by Aftab Ahmed in Bangalore; Editing by Peter Galloway