Travelers to buy insurer from Canada's E-L Financial for $1.1 billion

Mon Jun 10, 2013 12:00pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

(Reuters) - U.S. insurer Travelers Co Inc (TRV.N: Quote) said it would buy Dominion of Canada General Insurance Co from E-L Financial Co Ltd ELF.TO for about $1.1 billion to boost its presence in Canada.

Travelers' shares were down marginally at $82.79 in early trade on the New York Stock Exchange. E-L Financial shares rose about 10 percent to C$649.99 - their highest in about six years - on the Toronto Stock Exchange.

The deal will add Dominion's commercial and personal insurance portfolios to Travelers' business in Canada.

It will help E-L Financial, which operates as an investment and insurance holding company, narrow its focus to life and health insurance, and mutual funds and annuity products that it sells through majority-owned Empire Life Insurance Co.

The combined operations will be led by Dominion Chief Executive Brigid Murphy, Travelers said in a statement.

Dominion was the biggest contributor to E-L Financial's operating profit in the quarter ended March 31, accounting for more than a third of its operating profit.

However, E-L's operating income more than halved during the quarter as Dominion was hit by higher claims for automobile and weather-related property losses.

The deal, expected to close in the fourth-quarter, will have no significant impact on Travelers' 2013 earnings, but add slightly to 2014 profit.

Travelers, which has a market capitalization of about 31 billion, said it would fund the transaction through debt or preferred stock financing or a combination of both.   Continued...