Intact Financial shares rise on AXA deals
TORONTO (Reuters) - Shares of Intact Financial (IFC.TO: Quote) jumped 4.2 percent on Monday morning after the insurer closed its C$2.6 billion ($2.5 billion) acquisition of the Canadian arm of French insurance group AXA (AXAF.PA: Quote).
Intact, which launched the takeover in May, also said it will sell AXA Canada's life insurance business to Quebec-based SSQ Life Insurance Co for C$300 million. Intact, a property and casualty insurer, had deemed the life insurance business as not being core to its operations.
Toronto-based Intact, now independent, started life as the Canadian insurance arm of Dutch financial group ING. It sells insurance under the Belair Direct and Grey Power banners.
Canaccord Genuity analyst Mario Mendonca said C$300 million was a good price for the life insurance unit, but he said the stock's run-up on Monday was likely due to relief that the larger acquisition closed on time and with no conditions.
"There was a little bit of concern that there could be issues related to competition because they were picking up such a material market share, in Quebec particularly," he said.
Intact said the deal will increase its premiums to C$6.5 billion and boost its Canadian property and casualty market share to about 16.5 percent.
The company said it will use the proceeds from the sale of the life insurance unit to repay the term loan facility used to help finance the acquisition of AXA Canada.
Intact said that after the sale, its debt to total capital ratio should be in line with its target of 20 percent.
At mid-morning, the company's stock was up C$2.25 at C$56.05 on the Toronto Stock Exchange, the strongest performer in the S&P/TSX index's financials sector. Continued...