Intact Financial To Buy AXA Canada For C$2.6 Billion

Intact Financial Corp. (IFC.T) announced a definitive agreement to buy AXA Group's Canadian affiliate for C$2.6 billion (US$2.66 billion).

The Toronto-based insurer said the purchase will boost its direct premiums by C$2 billion to more than C$6.5 billion. AXA Canada is the sixth largest home, auto and business insurance company in Canada, it said.

Intact will fund the purchase with C$500 million of its own excess capital and through the issue of about C$800 million of equity. It will also access credit facilities of C$1.3 billion.

It expects to maintain a strong capital position after the purchase and added that it sees annual synergies of more than C$100 million from a combination of systems-related cost savings and other efficiencies.

AXA Canada parent AXA SA (CS.FR) is expected Wednesday outline details of an ambitious five-year strategy, which it launched late last year. The French insurance giant aims to show investors it's on track to expand again in the aftermath of the financial crisis.

Intact, meanwhile, said it expects to increase its profitability and to benefit from greater earnings stability resulting from a wider diversification of its activities across the country and across business lines.

-By Carolyn King, Dow Jones Newswires; 416-306-2100; [e-mail]