RSA buys Canada’s GCAN to create fourth-largest insurer

City A.M. Reporter
insurer RSA said it had agreed to buy Canada’s GCAN for 420m Canadian dollars (£259m), underscoring its takeover ambitions with a deal that creates Canada’s fourth-biggest general insurer.

RSA, best known in Britain for its More Than home and motor insurance business, said the deal would boost earnings immediately, and would generate a mid-teens investment return.

The deal comes weeks after RSA made an unsuccessful £5bn bid approach for British rival Aviva’s general insurance operations in the UK, Ireland and Canada.

Buying GCAN, currently owned by the Ontario Teachers’ Pension Plan Board, ranks as RSA’s biggest takeover since it bought out minority investors in Danish insurer Codan for £590m three years ago.

RSA shares finished flat for the day, slipping 0.1p to 132.5p while the benchmark FTSE 100 share index ended 0.6 per cent lower at 5,555.97.

The 300-year old RSA, which has traditionally pursued small bolt-on acquisitions, is funding the GCAN deal from its own cash resources. The group has around 23,000 employees and in 2009 its net written premiums were £6.7bn. Integration costs are estimated at around £12m, with the majority coming in the first year.