- Transformational acquisition, expanding geography and accelerating growth
- Expands Sagicor’s offering of protection and wealth management solutions into Canada
- Positions Sagicor as a leading provider of protection and savings products to the middle-market in North America
- ivari is the second largest provider of universal life insurance in Canada(1)
- ivari adds C$13.9 billion to Sagicor’s existing assets; pro-forma debt securities to move from 69% to 83%(2) investment grade as of year end 2021
- Immediately accretive to EPS and BVPS by double digit percentage points(3)(4)
- Improvement to MCCSR ratio(3); debt to capital ratio(3) approximately unchanged(4)
Sagicor Financial Company Ltd. (“Sagicor” or the “Company”) (TSX: SFC), a leading 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 leading 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(1). 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 US$20 billion of combined total assets and approximately US$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.
Dodridge Miller, Group President and Chief Executive Officer of Sagicor, said:
“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.”
Todd Lawrence, President and Chief Executive Officer of ivari, said:
“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.”
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(2). Furthermore, the transaction internal rate of return is well in excess of Sagicor’s targets. Sagicor intends to continue to maintain a strong capital(3) position post-acquisition. Sagicor’s pro-forma MCCSR(3) ratio is expected to improve by over 10 percentage points and its debt to capital ratio(1) is expected to remain approximately unchanged. Under IFRS 17, management expects a similarly attractive financial impact.(2)
The transaction is expected to be financed largely through new debt and cash on hand. A commitment for up to US$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 share purchase agreement and new debt commitment, and an investor presentation, will be filed on SEDAR in the near future.
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.
Conference Call
Sagicor Financial Company Ltd. will host a conference call for analysts and investors to discuss the acquisition on August 25, 2022, at 5:00 p.m. Eastern Daylight Time in Toronto (5:00 p.m. Atlantic Standard Time in Barbados and Trinidad and Tobago, 4:00 p.m. Eastern Standard Time in Jamaica). To listen to the call via live audio webcast, visit the Company’s website at www.sagicor.com, under the tab “Investor Relations.” The conference call is also available by dialing 1-416-764-8688 or 1-888-390-0546 (North American toll free) or 08006522435 (United Kingdom) or 1-866-290-2216 (Barbados) or 1-800-207-8221 (Trinidad), passcode 44731384. A replay will also be available until September 25, 2022, by dialing 1-416-764-8677 or 1-888-390-0541 (North American toll free), passcode 731384#. A transcript of the call will also be made available on www.sagicor.com.
Advisors
National Bank Financial acted as lead financial advisor, J.P. Morgan and RBC Capital Markets acted as financial advisors, and Stikeman Elliott LLP and Paul Hastings LLP acted as legal advisors to Sagicor.
About Sagicor Financial Company Ltd.
Sagicor Financial Company Ltd. (TSX: SFC) is a leading financial services provider in the Caribbean, with over 180 years of history, and has a growing presence as a provider of life insurance products in the United States. Sagicor offers a wide range of products and services, including life, health, and general insurance, banking, pensions, annuities, and real estate. Sagicor’s registered office is located at Clarendon House, 2 Church Street, Hamilton, HM 11, Bermuda, with its principal office located at Cecil F De Caires Building, Wildey, St. Michael, Barbados. Additional information about Sagicor can be obtained by visiting www.sagicor.com.
About ivari
With a national network of thousands of independent, professional advisors, ivari provides a full range of life insurance products to help Canadians make the right choice for their protection needs. ivari had C$13.9 billion in total assets and total gross premium revenue of C$968 million as at and for the year ended 2021. ivari’s head office is located at 200-5000 Yonge Street, Toronto, Ontario, M2N 7J8, Canada. Additional information about ivari can be obtained by visiting www.ivari.ca.
(1) Source: LIMRA’s Canadian Individual Life Insurance Sales 2021. LIMRA numbers are carrier-reported, and participants vary year-to- year, impacting reported market share.
(2) Accounting for planned sale of approximately C$700 million of direct equities and reinvestment into investment grade bonds by ivari by year end 2022.
(3) Represents a non-IFRS measure. See the “Non-IFRS Measures” section in this press release for relevant information about such measures.
(4) See the “Forward-Looking Information / Cautionary Statements” section in this press release.
(1) Based on ivari company reports.
(2) See the “Forward-Looking Information / Cautionary Statements” section in this press release.
(3) Represents a non-IFRS measure. See the “Non-IFRS Measures” section in this press release for relevant information about such measures.
(1) Represents a non-IFRS measure. See the “Non-IFRS Measures” section in this press release for relevant information about such measures.
(2) See the “Forward-Looking Information / Cautionary Statements” section in this press release.
