RSA sells Canadian broker for CAD$500m

RSA sells Canadian broker for CAD$500m

RSA is selling its shareholding in Noraxis Capital Corporation, its Canadian insurance brokerage arm, to a subsidiary of Arthur J. Gallagher for CAD $500m.

RSA expects to receive a cash consideration of CAD $441m (£238m) subject to closing adjustments on completion, after minorities, and including estimated excess working capital.

The deal is expected to close within two months, subject to regulatory approvals.

The transaction is expected to create a gain on sale of about £140m and to add roughly £225m to the group’s tangible net assets, improving the group’s capital strength.

“This disposal represents further progress against our aim of tightening the strategic focus of the Group, and brings to around £540m the announced sales since our new strategy and action plan was unveiled in February,” said Stephen Hester, RSA group chief executive.

“Noraxis is a sizeable brokerage business and unique in that context within the Group.

“RSA’s core strength is in providing, as principal, the best personal and commercial insurance products to our customers, and that is where our focus will continue to be as we deliver on our new strategy and action plan,” said Hester.

He added that RSA will continue to evaluate further non-core disposals, some of which are expected to agree during 2014.

Noraxis is one of Canada’s largest property and casualty insurance brokers, operating through six majority-owned units across Canada.

In RSA Group’s 2013 financial statements, Noraxis accounted for £184m of total assets and £85m of shareholders’ funds at December 31, 2013, and £23m of profit in the underwriting result (presented as a contra expense in the underwriting result of Canada), and £6m of profit after amortisation, tax and minority interests for the end of 2013.

Senior management of Noraxis and its subsidiaries are expected to remain with Noraxis at completion.

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