Insurance industry in N.A. sees Canadian insurer sold to American company

insurance industry news

Travelers has announced that it will be making the purchase for $1.25 billion in cash.

The North American insurance industry has seen another major acquisition as an American insurer, Travelers Companies Inc. has just revealed that it is making a purchase of the Dominion of Canada General Insurance Co.

This purchase is being made for a total investment of $1.125 billion to buy the company outright.

The acquisition is being made as a part of the attempt Travelers would like to make to expand its presence in the Canadian insurance industry. According to an analyst from BMO, Charles Sebaski, it is highly likely that the acquisition is being made as a strategic move as opposed to being a financial one. The purchase is only likely to give a very slight boost in the earnings at Travelers.

insurance industry newsAt the same time, there is more to this purchase in the Canadian insurance industry than simply presence.

Sebaski went on to say that Travelers feels that it will be able to use its advantages in technology to assist Dominion in bringing in more money. In an analyst note, he stated that “Travelers anticipates being able to use its considerable resources in systems and data analytics to improve the underlying combined ratios of Dominion, which has been operating at an underwriting loss for the last several years.”

He went on to point out that Travelers feels that it will be able to convert this operation to bring in an underwriting profit which is in line with the general business philosophy that the insurer carries.

The agreement would have the Canadian operations at Travelers integrate the newly acquired Dominion into itself and allow this combined business to maintain its current insurance industry headquarters in Toronto.

The CEO and president of Dominion, Brigid Murphy, said that “This is the perfect match for the Dominion.” She will be keeping her position following the combination of the business. She identified Travelers as a “recognized leader in the insurance industry” that has an excellent reputation that it has duly earned. She stated that her company is looking forward to working alongside the team at Travelers Canada as this new stage begins.

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