Property and casualty insurer RSA Canada is selling its majority stake in brokerage business, Noraxis Capital Corp., in a deal that values the company at about $500 million.
Toronto-based RSA Canada announced Tuesday that it is selling Noraxis to Arthur J. Gallagher & Co. in a deal, which is expected to generate $441 million in cash for the company. Upon completion of the transaction, Gallagher will hold approximately 87% of Noraxis, with the remaining 13% owned by management of Noraxis. The transaction is subject to regulatory approval and is expected to close in July.
RSA Canada first became involved in Noraxis in 1999 to support a growing Canadian broker network. However, it now says that it is selling to focus on its core business. “The timing was right to sell our stake,” said Rowan Saunders, CEO, RSA Canada. “Noraxis was strategically important, but not a core part of our business and our focus remains steadfast in executing our Canadian strategy and providing our customers and brokers with the best service and propositions as possible.”
Noraxis is a top-five Canadian insurance broker that provides retail commercial, personal and employee benefits insurance products and services. It generated nearly $125 million in revenue for the year ended December 31, 2013. It has more than 650 employees and operates out of 23 offices across Alberta, Manitoba, New Brunswick, Nova Scotia and Ontario.
“In Noraxis, we have found the ideal partner and together we now have a proven platform for organic growth and a leadership team that will continue to attract new merger partners in Canada,” said Patrick Gallagher, Jr., chairman, president and CEO of Gallagher.
“By adding Canada to our recent expansion in Australia, New Zealand and the U.K., we are now well positioned in those countries to replicate our successful acquisition strategy of partnering with smaller, family-owned, and entrepreneurial agents and brokers,” added Gallagher.