Intact Financial Corporation Announces $300 Million Medium Term Note Private Placement

Intact Financial Corporation (TSX: IFC), a leading provider of property and casualty (P&C) insurance in Canada, has announced a $300 million private placement of Series 14 unsecured medium term notes (the Notes). The Notes were offered on a best efforts basis through a syndicate led by CIBC Capital Markets and BMO Capital Markets. The Notes are direct unsecured obligations of Intact and rank equally with all other unsecured and unsubordinated indebtedness of Intact. The Notes were issued with a principal amount of $400 million and bear interest at a fixed annual rate of 5.276% until maturity on September 14, 2054.

The net proceeds from the private placement are intended to be used by Intact to partially fund the proposed indirect acquisition of assets comprising, among other things, the brokered commercial lines operations of Direct Line Insurance Group plc (Direct Line) and certain of its affiliates (the Acquired Business). The acquisition was announced by Intact on September 6, 2023, and is subject to certain closing conditions, including regulatory approvals.

The Notes have each been given a rating of A with a positive trend by DBRS Limited, a rating of Baa1 with a stable outlook by Moody's Investors Service, Inc., and a rating of A- with a stable trend by Fitch Ratings, Inc. These ratings reflect the market's positive view of Intact's creditworthiness and financial strength.

If Royal & Sun Alliance Insurance Limited (RSA) does not pay the initial cash purchase price for the Acquisition prior to 11:59 p.m. (London UK local time) on February 29, 2024, or if Intact delivers to CIBC notice stating that it does not intend to proceed with the Acquisition, then Intact will be required to redeem the Notes at a redemption price equal to 101% of the aggregate principal amount of the Notes, plus accrued and unpaid interest, if any, up to, but excluding, the date of redemption.

Intact's announcement of the private placement comes as the company continues to execute its growth strategy, which includes expanding its presence in key markets and diversifying its revenue streams. The acquisition of the brokered commercial lines operations of Direct Line is expected to strengthen Intact's position in the UK and Europe and provide access to new distribution channels and expertise.

In conclusion, Intact Financial Corporation's $300 million private placement of medium term notes is a strategic move that aligns with the company's long-term financial strategy and risk management approach. The proceeds from the private placement will be used to partially fund the proposed indirect acquisition of assets from Direct Line Insurance Group plc, which is expected to strengthen Intact's position in the UK and Europe. The Notes have been given positive ratings by major credit rating agencies, reflecting the market's positive view of Intact's creditworthiness and financial strength.