Industrial Alliance Insurance and Financial Services said that it will acquire all outstanding shares of American-Amicable Holding for a cash consideration of approximately CAD145m including expected excess capital of CAD45m.
According to Industrial Alliance, the transaction, which will be carried out through its wholly-owned US subsidiary IA American Life Insurance Company will be financed from cash on hand. The acquisition is expected to be immediately accretive to earnings by $0.05 per share on an annual basis.
In addition, the company’s solvency ratio post-transaction is expected to be 217% compared with 226% on a pro forma basis as at December 31, 2009 following share issues in February 2010. The agreement with American-Amicable is subject to the usual regulatory approvals and expected to close in the summer of 2010.
The company said that upon completion, the acquisition of American-Amicable which is based in Waco, Texas, by Industrial Alliance will increase its scale and presence in the US. American-Amicable operates through four Texas-domiciled subsidiaries.
Subsequent to closing, American-Amicable will become a wholly-owned subsidiary of IA American. IA American intends to maintain American-Amicable platform in Waco, Texas and also the existing IA American presence in Scottsdale, Arizona.
Yvon Charest, president and CEO of Industrial Alliance, said: “Building on our local operations in Scottsdale, Arizona, it provides us with the scale and presence to accelerate our US growth plan. Its life insurance products target the middle-income market which is under-served and offers significant growth opportunities.”