Travelers Buying E-L Financial Corp.’s Insurance Unit for $1.1 Billion

Andrew Klips |

Travelers InsuranceInsurer The Travelers Companies, Inc. (TRV) said Monday morning that it has come to terms with E-L Financial Corp. Ltd. (ELF:CA) to buy E-L’s commercial and personal insurance company, The Dominion of Canada General Insurance Co., for approximately $1.1 billion in cash as it looks to expand operations north of the U.S. border. Travelers is one of the biggest property and casualty insurers in the States.

The companies’ operations will be integrated and remain headquartered in Toronto. The deal will couple The Dominion’s commercial and personal portfolios with Traveler Canada’s surety, management liability and commercial middle market products.

New York City-based Travelers, who will fund the transaction through a combination of debt and/or preferred stock financing and internal resources, doesn’t expect the acquisition to have a significant impact on 2013 earnings. It’s expected to be slightly accretive to 2014 earnings.

Pending all approvals, the deal is expected to close in the fourth quarter.



“The Dominion is a great franchise, and this is a very good opportunity for Travelers to significantly improve its market position and scale in a meaningful market,” said Jay Fishman, chairman and chief executive of Travelers.

Brigid Murphy, currently president and CEO of The Dominion, will retain those roles of the bigger Travelers Canada. George Petropoulos, currently the president and CEO of Travelers Canada will move to vice chairman as well as Executive VP, Bond and Financial Products.

Calling the amalgamation a “perfect match,” Murphy said, “Travelers is a recognized leader in the insurance industry with a well-deserved reputation for excellence. We are looking forward to working with the Travelers Canada team as we begin this exciting new chapter, while continuing our commitment to the communities and organizations we serve.”

Shares of Travelers advanced about 1 percent at the opening bell, but are trading basically flat shortly into the trading day at $83.30. Shares of TRV are ahead 17 percent in 2013. Canadian-listed shares of E-L Financial gapped ahead on thin trade with the news to be trading ahead about 9 percent on the day at $645.00 each. Share of E-L are up about 50 percent in 2013.

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Companies

Symbol Name Price Change % Volume
TRV The Travelers Companies Inc. 122.27 -0.09 -0.07 1,698,631
ARL American Realty Investors Inc. 7.23 -1.42 -16.42 33,677

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