HAMILTON, Bermuda, May 2, 2017 /PRNewswire/ -- OneBeacon
Insurance Group, Ltd. (NYSE: OB) has entered into a definitive
merger agreement under which Intact Financial Corporation (TSX:
IFC) will acquire all outstanding OneBeacon shares for $18.10 in cash per share. The $18.10 per share acquisition price is 1.65 times
OneBeacon's book value per share as of March
31, 2017, and represents a 14% premium to the company's
closing stock price on the NYSE of $15.89 as of May 1,
2017 and a 15% premium to the volume weighted average share
price over the last 30 days. This represents aggregate cash
consideration of approximately $1.7
billion. In addition, OneBeacon debt of approximately
$275 million will remain
outstanding.
This transaction will create a North American leader in
specialty insurance, with over $1.5
billion of annual premiums. Furthermore, it bolsters
Intact's Canadian business with new products and cross-border
capabilities, and better positions the company to compete with
North American insurers.
Mike Miller, CEO of OneBeacon,
said, "We are all very excited to join the Intact family. The
opportunity to leverage Intact's deep technical, financial and
technology capabilities makes this combination the perfect next
step in the OneBeacon journey. Together, we will accelerate our
pursuit in creating a leading specialty insurer in North America. We look forward to working with
our U.S. and Canadian independent agents and brokers to deliver
market-leading capabilities to our targeted customers. Both
companies are dedicated to ensuring a seamless transition and look
forward to profitably growing our specialty portfolio going
forward."
Charles Brindamour, CEO of
Intact, said, "Today, we've taken an important step in building a
world-class P&C insurer. The addition of OneBeacon is creating
a leading North American specialty lines insurer focused on
small-to-midsize businesses. OneBeacon is a strong strategic fit
for Intact, with deep expertise in commercial and specialty lines,
and shared values. We see significant growth potential from the
combination of our specialty lines operations and we look forward
to welcoming OneBeacon employees to the Intact family."
OneBeacon was formed in 2001 when White Mountains Insurance
Group, Ltd. acquired the former CGU's U.S. property-casualty
business from Aviva plc. In 2006, White Mountains sold 27.6 million
of OneBeacon's common shares in an initial public offering, or
27.6% of OneBeacon's common shares at the time of the initial
public offering. As of May 2, 2017,
White Mountains owned 75.7% of OneBeacon's common shares,
representing 96.9% of the voting power. White Mountains has agreed
to vote in favor of the transaction.
The transaction, which was unanimously approved by OneBeacon's
board of directors, is subject to regulatory and shareholder
approvals and other customary closing conditions, and is expected
to close in the fourth quarter of this year. OneBeacon expects to
continue paying regular quarterly dividends consistent with past
practice prior to closing. Completion of the merger is not subject
to any financing conditions.
Credit Suisse Securities (USA)
LLC acted as exclusive financial advisor and Cravath, Swaine &
Moore LLP, Conyers, Dill & Pearman Limited and Kramer Levin Naftalis & Frankel LLP acted as
legal advisors to OneBeacon in the transaction.
About OneBeacon: OneBeacon Insurance Group, Ltd. is a
Bermuda-domiciled holding company
that is publicly traded on the New York Stock Exchange under the
symbol "OB." OneBeacon's underwriting companies offer a range of
specialty insurance products sold through independent agencies,
regional and national brokers, wholesalers and managing general
agencies. Each business is managed by an experienced team of
specialty insurance professionals focused on a specific customer
group or industry segment, and providing distinct products and
tailored coverages and services. OneBeacon's solutions target group
accident and health; architects and engineers; commercial surety;
entertainment; environmental; excess property; financial
institutions; financial services; healthcare; management liability;
ocean and inland marine; programs; public entities; technology; and
tuition refund. For further information about our products and
services visit: www.onebeacon.com and to remain up to date on
OneBeacon's news, follow us on Twitter @OneBeaconIns or visit our
online newsroom: www.onebeacon.com/newsroom.
About Intact Financial Corporation: Intact Financial
Corporation (TSX: IFC) is the largest provider of property and
casualty (P&C) insurance in Canada with
over $8.0 billion (CA) in annual premiums. Supported by
over 12,000 employees, the company insures more than five million
individuals and businesses through its insurance subsidiaries and
is the largest private sector provider of P&C insurance
in British Columbia, Alberta, Ontario,
Québec, Nova Scotia and Newfoundland &
Labrador. The company distributes insurance under the Intact
Insurance brand through a wide network of brokers, including
its wholly owned subsidiary, BrokerLink, and directly to
consumers through belairdirect.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995
The information contained in this news
release may contain "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. All
statements, other than statements of historical facts, included or
referenced in this news release that address activities, events or
developments which we expect will or may occur in the future are
forward-looking statements. The words "will," "believe," "intend,"
"expect," "anticipate," "project," "estimate," "predict" and
similar expressions are also intended to identify forward-looking
statements. These forward-looking statements include, among others,
statements with respect to our:
- change in book value per share or return on equity;
- business strategy;
- financial and operating targets or plans;
- incurred loss and loss adjustment expenses and the adequacy of
our loss and loss adjustment expense reserves and related
reinsurance;
- projections of revenues, income (or loss), earnings (or loss)
per share, dividends, market share or other financial
forecasts;
- expansion and growth of our business and operations;
- future capital expenditures; and
- pending legal proceedings.
These statements are based on certain assumptions and analyses
made by us in light of our experience and judgments about
historical trends, current conditions and expected future
developments, as well as other factors believed to be appropriate
in the circumstances. However, whether actual results and
developments will conform to our expectations is subject to a
number of risks, uncertainties or other factors which are described
in more detail beginning on page 16 of the Company's 2016 Annual
Report on Form 10-K, that could cause actual results to differ
materially from expectations, including:
- recorded loss and loss adjustment expense reserves subsequently
proving to have been inadequate;
- changes in interest rates, debt or equity markets or other
market volatility that negatively impact our investment
portfolio;
- competitive forces and the cyclicality of the property and
casualty insurance industry;
- claims arising from catastrophic events, such as hurricanes,
windstorms, earthquakes, floods or terrorist attacks;
- the continued availability of capital and financing;
- the continued availability and cost of reinsurance coverage and
our ability to collect reinsurance recoverables;
- the ability to maintain data and system security;
- the outcome of litigation and other legal or regulatory
proceedings;
- our ability to continue meeting our debt and related service
obligations or to pay dividends;
- our ability to successfully develop new specialty
businesses;
- changes in laws or regulations, or their interpretations, which
are applicable to us, our competitors, our agents or our
customers;
- actions taken by rating agencies from time to time with respect
to us, such as financial strength or credit rating downgrades or
placing our ratings on negative watch;
- our ability to retain key personnel;
- participation in guaranty funds and mandatory market
mechanisms;
- our ability to maintain effective operating procedures and
manage operational risk;
- changes to current shareholder dividend practice and regulatory
restrictions on dividends;
- credit risk exposure in certain of our business
operations;
- Bermuda law may afford less
protection to shareholders;
- our status as a subsidiary of White Mountains, including
potential conflicts of interest, competition, and related-party
transactions;
- changes in tax laws or tax treaties;
- the risk that the proposed merger with Intact may not be
completed on the currently contemplated timeline or at all;
- the failure to receive, on a timely basis or otherwise, the
required approval of the proposed merger with Intact by OneBeacon's
shareholders;
- the possibility that any or all of the various conditions to
the consummation of the merger may not be satisfied or waived,
including the failure to receive any required regulatory approvals
from any applicable governmental entities (or any conditions,
limitations or restrictions placed on such approvals);
- the occurrence of any event, change or other circumstance that
could give rise to the termination of the merger agreement,
including in circumstances which would require OneBeacon to pay a
termination fee or other expenses;
- risks related to diverting management's attention from our
ongoing business operations and other risks related to the
announcement or pendency of the proposed merger with Intact,
including on our ability to retain and hire key personnel, our
ability to maintain relationships with our customers,
policyholders, brokers, service providers and others with whom we
do business and our operating results and business generally;
- the risk that shareholder litigation in connection with the
transactions contemplated by the merger agreement may result in
significant costs of defense, indemnification and liability;
and
- other factors, most of which are beyond our control.
Consequently, all of the forward-looking statements made in this
news release are qualified by these cautionary statements, and
there can be no assurance that the anticipated results or
developments will be realized or, even if substantially realized,
that they will have the expected consequences. Readers should
carefully review these risk factors, and are cautioned not to place
undue reliance on our forward-looking statements. The
forward-looking statements in this news release speak only as of
the date on which they are made. We assume no obligation to update
publicly any such forward-looking statements, whether as a result
of new information, future events or otherwise.
Additional information and where to find it
This
communication may be deemed to be solicitation material in respect
of the proposed takeover of OneBeacon by Intact. In connection with
the proposed transaction, OneBeacon intends to file relevant
materials with the SEC, including a proxy statement in preliminary
and definitive form. Investors and security holders are urged to
read all relevant documents filed with the SEC (if and when they
become available), including OneBeacon's definitive proxy
statement, because they will contain important information about
the proposed transaction. Investors and security holders will be
able to obtain copies of the proxy statement and other documents
filed with the SEC (if and when available) free of charge at the
SEC's website, http://www.sec.gov, or for free from OneBeacon by
contacting ir@onebeacon.com. Such documents are not currently
available.
Participants in solicitation
This communication is
neither a solicitation of a proxy nor a substitute for any proxy
statement or other filings that may be made with the SEC in
connection with the proposed transaction. OneBeacon, Intact
and their respective directors, executive officers and other
members of management and employees, under SEC rules, may be deemed
to be "participants" in the solicitation of proxies from holders of
OneBeacon's common shares in favor of the proposed transaction.
Information about OneBeacon's directors and executive officers is
set forth in OneBeacon's Proxy Statement on Schedule 14A for its
2017 Annual General Meeting of Shareholders, which was filed with
the SEC on April 11, 2017, its Annual
Report on Form 10-K for the fiscal year ended December 31, 2016, which was filed with the SEC
on February 27, 2017 and its Current
Report on Form 8-K filed with the SEC on March 6, 2017. Information about Intact's
directors and executive officers is set forth in Intact's
Management Proxy Circular for its 2017 Annual and Special Meeting
of Shareholders, its Annual Information Form for the fiscal year
ended December 31, 2016, and its
Management's Discussion and Analysis for the fiscal year ended
December 31, 2016, all of which are
available on www.sedar.com. These documents may be obtained
free of charge from the sources indicated above. Additional
information regarding the interests of these participants which
may, in some cases, be different than those of OneBeacon's
shareholders generally, will also be included in OneBeacon's proxy
statement relating to the proposed transaction, when it becomes
available.
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SOURCE OneBeacon Insurance Group, Ltd.