AXA TO SELL CANADIAN BUSINESS TO IFC FOR CAD2.6BN

French insurer Axa is to sell its property-casualty and life assurance businesses in Canada to Intact Financial Corp (IFC) for CAD2.6bn ($2.68bn), generating an exceptional capital gain of about €900m ($1.3bn) for the French business. Axa is also entitled to receive up to CAD100m in contingent considerations, based on profitability of the sold operations over the next five years. CEO Henri de Castries said that the sale "represents a further step in our strategy of redeploying capital towards geographies with higher long-term growth prospects". The full-year underlying earnings of the Canadian businesses in 2010 were €149m, of which €139m came from non-life. It is the sixth-largest insurer in Canada in terms of premiums generated, selling home, motor and business cover. The deal is expected to close before the end of Q3 2011. Toronto based IFC said that the takeover, the largest by a Canadian non-life company, would generate an internal rate of return of 20%, increasing annual operating EPS by 15% in the mid-term. It expects annual cost savings of CAD100m from the acquisition, which will increase annual turnover to more than CAD6.5bn. It will finance the deal with CAD500m excess capital, CAD800m stock and CAD1.3bn in credit facilities. Intact is the former Canadian insurance unit of ING Group, having been sold off in early 2009 to raise CAD1.7bn ( IIN 24, February 4 2009). The deal will increase IFC's presence in the provincial markets of Quebec and British Columbia. IFC's president and CEO Charles Brindamour said that the purchase would "strengthen our offerings, notably in business insurance, improve our capabilities to support insurance brokers, reinforce our competencies in risk selection, expand our distribution platform and deepen the quality of our management team". The sale by AXA is the latest in a global restructuring that has seen it sell its Australian and New Zealand operations in return for gaining full control of Axa Asia-Pacific's Asian businesses, and its UK life business to Resolution.