A.M. Best Comments on Intact Financial Corporation’s Proposed Acquisition of Jevco Insurance Company

A.M. Best Co. has commented that the financial strength rating, issuer credit ratings and debt ratings of Intact Financial Corporation (Intact) (Ontario) [TSX: IFC] and its insurance subsidiaries are unchanged. The outlook for all ratings is stable.

This comment follows the announcement that Intact has entered into an agreement with The Westaim Corporation (Westaim) (Ontario) [TSX: WED] to acquire Westaim’s wholly owned subsidiary, Jevco Insurance Company (Jevco) (Quebec) for $530 million. The transaction is expected to be funded by available sources. Jevco is a provider of specialty and niche products for individuals and business in Canada.

A.M. Best will continue to monitor Intact’s financial leverage position, along with levels of tangible capital and goodwill, relative to its current rating level and outlook. Intact has demonstrated success in acquiring and integrating companies. However, given the close proximity to the recent sizeable acquisition of AXA, A.M. Best believes that execution risk is heightened slightly. Accordingly, while there is no impact to Intact’s ratings, A.M. Best will continue to closely monitor the integration and its impact on the company’s overall results.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding Canadian BCAR for Property/Casualty Insurers”; “Rating Members of Insurance Groups”; and “Insurance Holding Company and Debt Ratings.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

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