Property casualty insurance provider Travelers Cos., Inc. (TRV) agreed Monday to acquire Dominion of Canada General Insurance Co. from E-L Financial Corp. Ltd. (ELF.TO) for about $1.125 billion in cash. The deal will have no significant impact on 2013 earnings per share and will be slightly accretive to 2014 earnings per share.
"This transaction is consistent with our strategy to make thoughtful investments in attractive markets outside the United States. The Dominion is a great franchise, and this is a very good opportunity for Travelers to significantly improve its market position and scale in a meaningful market," Travelers Chairman and CEO Jay Fishman said.
New York-based Travelers said it will fund the deal, subject to market conditions, through a combination of debt and/or preferred stock financing and internal resources. The deal, subject to regulatory approvals, is expected to close before the end of 2013.
The Dominion is one of Canada's largest property and casualty insurers. The deal will boost Travelers' presence in Canada and expand its commercial lines business by using Dominion's extensive distribution network and established customer base in Canada.
Travelers noted that the combined business will benefit from its sophistication in the use of data and analytics as well as claim and risk control capabilities.
Travelers said it will integrate the Dominion into its Canadian operations and the combined organization would remain headquartered in Toronto.
Following the closure of the deal, Dominion President and CEO Brigid Murphy will continue in his roles at the combined business, while Travelers Canada President and CEO George Petropoulos will help Murphy lead the new combined business as vice chairman. Petropoulos will also be executive vice president of bond and financial products.
"The combination will substantially enhance Travelers' product breadth in Canada by coupling The Dominion's commercial and personal portfolios with Travelers Canada's surety, management liability and commercial middle market products," Petropoulos stated.
Petropoulos added, "We plan to leverage the expertise of both companies, and we will work closely with The Dominion team to assure a smooth transition for employees, customers and brokers."
In Monday's regular trading session, TRV is currently trading at $82.68, down $0.76 or 0.91% on a volume of 0.50 million shares. In the past 52-week period, the stock has been trading in a range of $60.62 to $89.00.
ELF.TO is currently trading on the TSX at C$648.00, up C$56.00 or 9.46% on a volume of 757 shares.
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