Intact inks $1B deal for two insurers as a portal to rich clients

Charles Brindamour, Chief Executive Officer of Intact Financial Corporation, is shown in Montreal on Thursday, April 25, 2019. THE CANADIAN PRESS/Paul Chiasson

TORONTO -- Intact Financial Corp. has signed a deal to buy two specialty insurers in a move that gives it a foothold in the market for wealthy clients, part of a broader push among financial services firms toward high-net-worth customers.

The $1-billion agreement with Princeton Holdings Ltd. will see The Guarantee Co. of North America and Frank Cowan Co. Ltd. come under the umbrella of Intact, it said Thursday.

The acquisition "bolsters Intact's position and adds new products for the high-net-worth customer segment," the Toronto-based firm said.

For Intact, which provides property and casualty insurance in Canada and specialty insurance across the continent, The Guarantee opens the door to North Americans flush with assets -- and who need them insured.

One-third of The Guarantee's business comprises personal lines, including a high-net-worth home and auto insurance portfolio in Canada, Intact said.

A Canadian-owned company founded in Montreal in 1872, The Guarantee collects about $560 million in annual gross premiums, which would bring Intact's direct premiums from specialty lines in North America to nearly $3 billion, according to Intact. Specialty lines insurers typically underwrite more difficult and unusual risks or higher-risk accounts, such as professional liability, marine and aviation.

The transaction is expected to close in the fourth quarter of this year, subject to regulatory approvals.

"We are delivering on our objectives to grow in Canada and build a leading North American specialty platform. I'm enthusiastic about what we will accomplish by leveraging the combined expertise of our teams and our expanded offering," said chief executive Charles Brindamour.

To finance the transaction, Intact said it has access to its own capital resources and bank facilities and may evaluate capital markets alternatives.

The rush to attract rich clients in a world where the wealthiest one per cent are on track to hold nearly two-thirds of global wealth by 2030 -- according to a U.K. House of Commons library study last year -- was evident elsewhere Thursday.

Robo-adviser Wealthsimple Inc. announced it will team up with Grayhawk Investment Strategies Inc. to offer the Calgary-based company's investment strategies to advisers who use a particular Wealthsimple platform and serve high-net-worth clients.

Grayhawk handles hundreds of millions of dollars for 30 of Canada's wealthiest families.

The partnership folds into Toronto-based Wealthsimple's strategy to expand beyond the 100,000 clients and $2.5 billion assets it managed at the end of 2018 into a broad-based financial services institution.