May 20 British insurer RSA Insurance Group Plc said on Monday it had reached agreement to sell its majority-owned Canadian brokerage business - Noraxis Capital Corp - to U.S. insurance brokerage Arthur J. Gallagher & Co for C$500 million ($460.60 million).
One of the top 100 insurers on the FTSE said in a statement it expects to receive cash consideration of C$441 million ($406.25 million) subject to closing adjustments on completion.
The acquisition, which is subject to regulatory approval, is expected to close in July and to result in a gain of approximately 140 million pounds ($235 million).
Upon the completion of the transaction, Gallagher will hold approximately 87 percent of the equity interests in Noraxis, while 13 percent will continue to be owned by various management employees of Noraxis.
"This disposal represents further progress against our aim of tightening the strategic focus of the Group, and brings to around 540 million pounds the announced sales since our new strategy and action plan was unveiled in February," RSA chief executive Stephen Hester said in a statement late Monday.
He added that the group "would continue to evaluate further non-core disposals, some of which it expect to agree during 2014."
The transaction is expected to add approximately 225 million pounds to RSA's tangible net assets, improving the group's capital strength, the insurer said.
Under its financial restructuring plan, RSA announced the sale of three Baltic businesses and one Polish operation in April.
The troubled UK insurer has been seeking to boost its capital base by up to 1.6 billion pounds ($2.7 billion) after it was hit by a series of weather-related claims and an accounting scandal at its Irish unit.
"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..," J. Patrick Gallagher, chief executive of New York-listed Gallagher's said in a presentation on its website.
Noraxis, founded by RSA Canada in 1999, provides commercial, personal and employee benefits services on a retail basis. ($1 = 1.0855 Canadian Dollars) ($1 = 0.5943 British pounds) (Reporting by Aashika Jain in Bangalore; Editing by Ken Wills)