- Acquisition accelerates iA’s growth strategy, capitalizing on positive growth trends within the vehicle warranty market
- Creates a leading U.S. vehicle warranty platform of scale with significant synergies, which will drive iA’s participation in future industry consolidation
- Diversifies iA’s product and geographic mix, as well as distribution capabilities
- Adds a strong, proven management team, led by Patrick Brown, which will drive U.S. expansion efforts in vehicle warranties
- Advances iA’s ongoing shift towards a capital-light business
Quebec City, QC (Dec. 4, 2019) – iA Financial Corporation Inc. (the “Company”), the holding company of iA Financial Group, announced today that it has entered an agreement to acquire the American company IAS Parent Holdings, Inc. and its subsidiaries (collectively “IAS”). The agreed purchase price is US$720 million.
Based in Austin, Texas, IAS is one of the largest independent providers of solutions in the U.S. vehicle warranty market with more than 600 employees and over 35 years of history. IAS provides a comprehensive portfolio of vehicle warranties and related software and services sold through one of the industry’s broadest and most diverse distribution networks consisting of over 4,300 dealers in all fifty states.
This acquisition is highly complementary to the Company’s existing warranty operations in the U.S. with respect to product suite, distribution networks, and geographic scope. The synergies from the combined operations will create a true centre of excellence in dealer services that will provide a platform for future growth.
“This transaction leverages the expertise and experience in dealer services that iA Financial Group has built over the last 20+ years in Canada and more recently in the U.S. through the acquisition of Dealers Assurance Company in 2018. The U.S. market for extended auto warranties, valued at almost US$39 billion, is highly-fragmented and provides significant opportunity for organic growth and consolidation. Our investment in IAS will enable us to be a best-in-class provider of vehicle warranty products and services,” said Denis Ricard, President and Chief Executive Officer of iA Financial Group.
“We look forward to this new chapter in our U.S. expansion with great optimism, combining IAS with our already well-established presence in the United States and leveraging our strong track record in dealer services in Canada,” stated Mike Stickney, Chief Growth Officer of iA Financial Group and head of the Company’s U.S. operations since 2005. “This acquisition expands our customer offering by bringing an end-to-end product suite and omni-channel distribution, as well as reinforcing our national breadth. Along with the high-quality senior management of IAS who will be joining our organization, we will have the platform to pursue our growth strategy in the vehicle warranty market in the United States.”
“The IAS team is excited to become part of the iA family. I am very proud of our team’s hard work and record growth the last few years,” noted Patrick Brown, President and Chief Executive Officer of IAS. “Going forward, as part of a publicly-traded company with a market capitalization of more than C$7.0 billion, we are well‑positioned to continue the long-term support of our valued distribution partners and to deliver on our mission of empowering vehicle owners to avoid unforeseen repair costs.”
The acquisition will be funded by iA Financial Group’s excess capital. After transaction close, the pro forma solvency ratio of the Company as at September 30, 2019 is 117%. The Company expects the contribution from this acquisition to be neutral to earnings per share in the first year and accretive as of the second year. The transaction is expected to close in the first half of 2020, subject to obtaining the usual regulatory approvals in Canada and the United States, and other customary closing conditions.
UBS Securities Canada Inc. is serving as exclusive financial advisor to iA Financial Group, and Locke Lord LLP as legal advisor.
About iA Financial Group
iA Financial Group is one of the largest insurance and wealth management groups in Canada, with operations in the United States. Founded in 1892, it is one of Canada’s largest public companies and is listed on the Toronto Stock Exchange under the ticker symbols IAG (common shares) and IAF (preferred shares).
iA Financial Group is a trademark and business name of iA Financial Corporation Inc. and Industrial Alliance Insurance and Financial Services Inc.
This news release may contain statements relating to strategies used by iA Financial Group or statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “may”, “will”, “could”, “should”, “would”, “suspect”, “expect”, “anticipate”, “intend”, “plan”, “believe”, “estimate”, and “continue” (or the negative thereof), as well as words such as “objective” or “goal” or other similar words or expressions. Such statements constitute forward‑looking statements within the meaning of securities laws. In this news release, forward-looking statements include, but are not limited to, information concerning possible or assumed future operating results. These statements are not historical facts; they represent only expectations, estimates and projections regarding future events.
Although iA Financial Group believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. Factors that could cause actual results to differ materially from expectations include, but are not limited to: general business and economic conditions; level of competition and consolidation; changes in laws and regulations including tax laws; liquidity of iA Financial Group including the availability of financing to meet existing financial commitments on their expected maturity dates when required; accuracy of information received from counterparties and the ability of counterparties to meet their obligations; accuracy of accounting policies and actuarial methods used by iA Financial Group; insurance risks including mortality, morbidity, longevity and policyholder behaviour including the occurrence of natural or man‑made disasters, pandemic diseases and acts of terrorism.
Additional information about the material factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in the “Risk Management” section of the Management’s Discussion and Analysis for the year 2018, the “Management of Risks Associated with Financial Instruments” note to the audited consolidated financial statements for the year ended December 31, 2018, and elsewhere in iA Financial Group’s filings with the Canadian Securities Administrators, which are available for review at sedar.com.
The forward-looking statements in this news release reflect iA Financial Group’s expectations as of the date of this document. iA Financial Group does not undertake to update or release any revisions to these forward‑looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events, except as required by law.
SOURCE: Industrial Alliance Insurance and Financial Services Inc.Tags: Acquisition, Industrial Alliance