Economical Insurance is an ideal acquisition target if demutualization is approved

Published: November 22, 2017

Updated: July 24, 2018

Author: Luke Jones

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Economical Insurance has detailed its desire to demutualize and is likely to be granted approval to do so. When the process is complete, the Waterloo insurer is “likely” to attract interest from larger insurance companies as an ideal acquisition target.

Paul Holden, equity analyst for the Canadian Imperial Bank of Commerce’s CIBC Capital Markets division says “A very widely held assumption among investors is that Intact would look at targeting Economical once available.”

There are several big insurers that could see Economical Insurance as attractive, such as Aviva Canada and RSA Canada (two British companies that are the second and third biggest carriers in the country). Intact Insurance, the largest P&C provider in Canada, has previously purchased AXA Canada and Jevco.

Speaking to Canadian Underwriter, Holden said the British companies are likely candidates;

“I don’t think we can rule out some of those players, particularly some of the European players that have looked to grow their presence in Canada,” he said. “The one that has more recently done a transaction of significance would be Aviva with the RBC deal.

“RSA have also done deals in the past. [The RSA Group] had a tough time in the past, but seems to have righted itself. That is one we might not want to rule out.”