(Reuters) – Canadian property and casualty insurer Intact Financial said on Wednesday it would buy British insurer Direct Line’s brokered commercial lines operations for an initial payment of 520 million pounds ($650 million) to expand its UK unit RSA.
The deal will result in the transfer of renewal rights, brands, employees, and systems to RSA.
“The transaction enhances our position in the UK by doubling down on lines of business where we already outperform,” Intact’s CEO Charles Brindamour said in a statement.
The deal terms include potential for up to a further 30 million pounds contingent payment linked to the financial performance of the acquired business lines.
The Direct Line unit generated 530 million pounds in written premiums in 2022 and delivered an average combined ratio of about 96% across 2021 and 2022 by offering insurance to small business owners, landlords, and for vans and fleets.
Intact is exploring strategic options for RSA’s UK Personal lines business, including a possible sale, the company said.
UK & International account for about a fifth of Intact’s underwriting revenue.
($1 = 0.7997 pounds)
(Reporting by Jaiveer Singh Shekhawat in Bengaluru and Nivedita Balu in Toronto; Editing by Sriraj Kalluvila)