Tryg byder 34 mia. kr. for majoritets ejerandel i Codan Forsikring

RSA INSURANCE GROUP PLC (“RSA”) FURTHER STATEMENT REGARDING PROPOSAL

Further to the announcement by RSA earlier today regarding an approach from Intact Financial Corporation (“Intact”) and Tryg A/S (“Tryg”) (together, the “Consortium”) regarding a possible cash offer for the Company (the “Proposal”) (link), RSA and the Consortium together make the following further statement regarding the Proposal.

The Proposal comprises 685 pence in cash per RSA share, plus payment by RSA of the announced interim dividend of 8 pence per share (the “Interim Dividend”). This would represent an approximately £7.2 billion transaction with Intact paying £3.0 billion and Tryg paying £4.2 billion. Intact would retain RSA’s Canada and UK & International operations and obligations, Tryg would retain RSA’s Sweden and Norway operations, and Intact and Tryg would co-own RSA’s Denmark operations.

The Proposal is subject to the satisfaction or waiver of pre-conditions relating to, amongst other things, due diligence, the recommendation of the Board of RSA, the support of RSA’s pension fund trustees and Board approvals from Intact, Tryg and TryghedsGruppen. The Board of RSA has indicated to the Consortium that it would be minded to recommend the Proposal, subject to satisfactory resolution of the other terms of the Proposal, including a period of due diligence which is currently underway by the Consortium.

The Consortium views the combination of RSA’s businesses with those of Intact and Tryg as strategically compelling. The acquisition would strengthen Intact’s position as a world-class P&C (property and casualty) insurer, increasing Intact’s total direct premiums written from approximately C$12 billion to C$20 billion. The combination of RSA’s Swedish and Norwegian operations with Tryg provides Tryg with a unique opportunity to strengthen its position and break into the top-3 for P&C in Sweden and Norway.

Strategically, Intact would expand its position in the competitive Canadian P&C industry where operational excellence is imperative for outperformance. The acquisition would also create a leading global specialty lines platform with an expanded product offering and access to new customers for Intact’s existing specialty franchises. Intact also sees significant opportunity to deploy its customer driven data and analytics focused approach in RSA’s UK & International personal and commercial lines businesses.

Intact intends to finance its portion of the proposed transaction and associated transaction costs with an equity private placement with approximately three-quarters provided by cornerstone investors, together with debt and preferred share issuances. Intact intends to utilize an unsecured bridge and term loan credit facility to provide funds certainty for the proposed transaction. Intact will structure the financing to support its current credit ratings. The proposed acquisition is expected to exceed Intact’s internal rate of return threshold. It is also expected to be immediately accretive to net operating income per share on closing, high-single digit in the first year and reaching upper-teens within 36 months. As well, Operating ROE is expected to be maintained at a mid-teens level in the medium term, with BVPS increasing in excess of 25% on completion of the acquisition.

Similarly, the acquisition would provide Tryg a unique opportunity to strengthen its position in Swedish and Norwegian P&C, creating the largest listed P&C insurer in Scandinavia with gross premiums earned of approximately DKK 31 billion and total assets of approximately DKK 99 billion. The acquisition would improve Tryg‘s geographical and product diversification, particularly in Sweden. Tryg is very confident that it will be able to seamlessly combine RSA’s Swedish and Norwegian operations, with Tryg further benefiting from its recent experience in the successful integration of Alka in Denmark.

The Potential Transaction would result in a step-change in the Tryg group’s profitability, driven by the strong underlying profitability of RSA’s Swedish and Norwegian Businesses and the sizeable synergy potential across Sweden and Norway. Following completion, Tryg would expect to generate annualised synergies of DKK 900 million. In combination, these are expected to drive a return on investment of approximately c.7%, high teens EPS accretion by 2023 and a material increase in dividend capacity.

Tryg would seek to finance its portion of the proposed transaction and associated transaction costs primarily via a rights issue in 2021 to be underwritten on a standby basis to provide certain funds for the proposed transaction.

Regarding RSA’s Danish business, with over $1 billion in annual premiums, Intact sees an opportunity to sustain its personal lines operating performance and to continue to improve commercial lines, while retaining optionality with respect to strategic alternatives for the business.

Pursuant to Rule 2.5 of the Code, the Consortium reserves the right to:

1. vary the form and/or mix of the consideration described in this announcement:

1. with the consent of the Board of RSA;
2. if a third party announces a firm intention to make an offer for RSA; or
3. if RSA announces a whitewash transaction pursuant to the Code; and

2. announce an offer on less favourable terms than the Proposal:

1. with the consent of the Board of RSA;
2. if a third party announces a firm intention to make an offer for RSA at a lower value than the Proposal;
3. if RSA announces, declares, or pays a dividend or any other distribution or return of capital to its shareholders (other than the Interim Dividend) after this announcement (in which case the Consortium reserves the right to reduce the offer price by an amount up to the amount of such dividend, distribution or return of capital); or

4. if RSA announces a whitewash transaction pursuant to the Code.

There can be no certainty that an offer will be made for RSA under the Code. A further announcement will be made as appropriate.

In accordance with Rule 2.6(a) of the Code, the Consortium must, by not later than 5.00 p.m. (London time) on 3 December 2020, either announce a firm intention to make an offer for RSA in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer for RSA, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline will only be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code.

In accordance with Rule 26.1 of the Code, a copy of this announcement will be available, subject to certain restrictions relating to persons resident in restricted jurisdictions, at www.rsagroup.com, www.Intactfc.com and www.Tryg.com by no later than 12 noon (London time) on 6 November 2020. The content of the websites referred to in this announcement are not incorporated into and do not form part of this announcement.

This announcement contains inside information relating to Tryg for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR), and is disclosed in accordance with Tryg’s obligations under Article 17 of MAR. For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, the person responsible for arranging for the release of this announcement on behalf of Tryg is Bettina Drejer Clausen, General Counsel.