Travelers Acquires Dominion of Canada

The $1.1 billion transaction is expected to close in the fourth quarter of this year.

The Travelers Companies (New York) has purchased The Dominion of Canada General Insurance Company (Toronto) for about $1.1 billion from E-L Financial Corporation Limited.

The Dominion and Travelers' Canadian operations will be integrated and headquartered in Toronto. Travelers will finance the buy through a combination of debt and/or preferred stock financing and internal resources, according to a statement.

A Travelers spokesman tells Insurance & Technology that all IT-related decisions regarding the transaction will occur after closure. Company chairman and CEO Jay Fisherman said in a press release that acquiring The Dominion would be a good opportunity to improve Travelers' market position and scale in a meaningful market.

"This transaction is consistent with out strategy to make thoughtful investments in attractive markets outside the United States," he said. "We expect that the transaction will have no significant impact on 2013 earnings per share and will be slightly accretive to 2014 earnings per share."

Alan Schintizer, Vice Chairman and head of Travelers' Financial Professional & International Insurance business segment, added in the statement, "the combined business will benefit from Travelers' sophistication in the use of data analytics as well as claim and risk control capabilities."

Aite Group analyst Stephen Applebaum notes that the buy takes Travelers from .64% of the Canadian market to the top 10 by buying Dominion:

"What is interesting is that this is happening as the Liberal government in charge of the Province of Ontario, where DOC earns 50% of its premium, is preparing to implement the government's mandatory 15% auto insurance rate rollback and a potential reduction in the Return on Equity benchmark for Canadian insurance companies. Could this transaction therefore signal the beginning of a surge in insurance M&A activity, domestic and cross-border, as under-performing Canadian carriers seek exits or partners to help them quickly boost operational excellence in order to meet these government restrictions profitably?" he wrote in an e-mail to insurance media outlets.

As a result of the sale, George Petropoulos, President and CEO of Travelers Canada, become EVP, Bond and Financial Products, for Travelers. Petropoulos will also help Brigid Murphy, who will continue to be President and CEO of The Dominion for the combined organization.