Sagicor to acquire ivari
Sagicor Financial Company, a financial services provider in the Caribbean with a growing presence in the U.S., has entered into a definitive agreement to acquire ivari, a subsidiary of Wilton Re Ltd., subject to the satisfaction of customary conditions, including required regulatory approvals.
The expected consideration, to be paid in cash at closing, is C$325 million, subject to certain adjustments. This purchase price assumes funding at ivari’s current target total capital ratio under the LICAT 2023 capital adequacy standard recently finalized by OSFI and following the implementation of IFRS 17, both of which will be in force commencing January 1, 2023. Prior to the closing, ivari is expected to have additional equity capital injected into the business to meet this new standard, which is reflected in the above expected purchase price.
Headquartered in Toronto, ivari is a middle-market individual life insurer in Canada with over 80 years of history in the region. ivari provides individual life and critical illness insurance solutions for the Canadian middle-market. Currently, ivari has approximately 700,000 policyholders across Canada and has over 250 employees.
The acquisition of ivari aligns with Sagicor’s business strategy of growing in individual life insurance and diversifying into adjacent geographic markets. Canada has a large, well-established, and growing life insurance market. ivari has historically proven its ability to grow, particularly in universal life insurance with an 11% new paid premium compound annual growth rate from 2017 to 2021. This acquisition would result in a Caribbean-headquartered international life insurance company with major operations in the Caribbean, the U.S., and Canada. On a pro forma basis, Sagicor would have over $20 billion of combined total assets and approximately $2.6 billion of annual total gross premium revenue as of year end 2021. The transaction combines Sagicor’s over 180 years of experience in individual life insurance and brings on ivari’s high caliber team, efficient operating platform, strong advisory channels and focused business model that is scalable for growth.
“Today we have taken a new step in shaping Sagicor’s future. The acquisition of ivari transforms Sagicor into a leading North American insurer serving the middle-market in addition to our market leadership in the Caribbean. We are excited about ivari’s leading position in the Canadian market and its focus on improving its customers’ financial well-being. It is a scaled business primed for growth with C$13.9 billion in well-managed assets as of year end 2021 and a dedicated and focused management team. Through this acquisition, Sagicor will double the size of its balance sheet and deliver its over 180 years of experience in individual life insurance to the Canadian market.” – Dodridge Miller, Group president and CEO of Sagicor.
“ivari is pleased to join the Sagicor Group of companies. Over the past several years, we have simplified our business model to focus on where we have scale and deep and meaningful relationships to provide exceptional service to our advisors and customers. ivari is focused on accelerating our growth in the underserved middle-market in Canada and distributes through a strong independent distribution network based on a long history of relationships built on trust. ivari’s customers, distribution network and other stakeholders will continue to experience the same level of service they are accustomed to. The team’s dedication to providing excellent service continues. We are excited by our strong growth prospects and what the future of ivari holds as part of the Sagicor Group of companies.” – Todd Lawrence, president and CEO of ivari.
The acquisition is expected to be immediately accretive. Based on ivari’s 2021 net income of C$74 million, and assuming the financing as contemplated, the transaction would be greater than 25% accretive on an earnings per share pro forma 2021 basis. Furthermore, the transaction internal rate of return is well in excess of Sagicor’s targets. Sagicor intends to continue to maintain a strong capital position postacquisition. Sagicor’s pro-forma MCCSR ratio is expected to improve by over 10 percentage points and its debt to capital ratio is expected to remain approximately unchanged. Under IFRS 17, management expects a similarly attractive financial impact.
The transaction is expected to be financed largely through new debt and cash on hand. A commitment for up to $320 million of new debt financing has been entered into in the form of a 5-year senior secured term loan facility. As part of its capital management strategy, Sagicor may opt to replace or refinance this term loan with debentures issued in the debt capital markets or other financing sources in whole or in part if and when appropriate.
The transaction is expected to close in the next 6 to 12 months and is subject to receipt of regulatory approvals and satisfaction of customary closing conditions.
