By Ben Dummett

A Canadian and Danish insurance consortium agreed Wednesday to buy the U.K.'s RSA Insurance Group PLC for GBP7.2 billion, equivalent to $9.6 billion, in a deal that would rank it among the biggest acquisitions of a British company so far this year.

Canada's Intact Financial Corp. has teamed up with Denmark's Tryg A/S to acquire RSA, which can trace its roots back to 1706.

The tie-up offers more proof that companies remain interested in making big bets on the U.K. despite the uncertainty over the potential economic fallout after the country completes its split from the European Union at the start of next year. The deal would be the fourth largest involving a U.K. target this year after Liberty Global PLC's $12.3 billion pact to acquire Telefonica SA's O2 telecommunications business, according to Dealogic.

Earlier this month, the U.K. government laid out its post-Brexit plan for the country's financial services sector, highlighting in part its openness to international markets.

Intact and Tryg will split RSA's operations by geography between the two insurers. Each gains access to the property and casualty insurance businesses that most complement their respective operations, while reducing the deal's overall risk by making it easier for each side to digest. Talks of the deal were first disclosed earlier this month when RSA's stock jumped in line with the proposed offer price.

RSA has been considered a takeover target since Zurich Insurance Group AG bid $8.8 billion to acquire the U.K. insurer in 2015. That bid quickly fell apart the same year after Zurich pulled the offer to focus on recovering losses incurred as result of explosions at the time in China. But the current proposal points to much-anticipated consolidation by insurance industry participants, who have predicted for months that perennially low interest rates and earnings dented by Covid-19 would eventually yield mergers.

The terms call for the consortium to pay GBP6.85 for each RSA share and agree to the payout of an already announced interim dividend of 8 pence a share to shareholders, the companies said in a release.

Based in Toronto, Intact will pay GBP3 billion for the London-based insurer's Canadian and U.K. operations, as well as for RSA's businesses in Ireland, parts of Europe and the Middle East. Tryg, which is headquartered in Ballerup, Denmark, is paying GBP4.2 billion to acquire RSA's business in Sweden and Norway. Intact and Tryg will co-own RSA's Denmark unit.

Intact is already Canada's biggest property-and-casualty insurance company, based on written premiums. It offers both personal auto and home insurance, as well as property, liability and other types of business insurance. The addition of RSA's business will expand Intact's share of its home market to 22% from 17%, further strengthening that leading position, CIBC World Markets said in a recent report. The deal also allows Intact to enter the commercial P&C market in the U.K. and Europe to access new customers, CIBC said.

Overall, the deal is expected to increase Intact's total direct written premiums to 20 billion Canadian dollars, equivalent to $15.3 billion, from C$12 billion.

Tryg, meanwhile, gains scale in Sweden from its share of RSA's operations. The insurer would also become the biggest listed P&C insurer in Scandinavia with a premium base of approximately 32 billion Danish kroner, equivalent to about $5.1 billion, and total assets of approximately DKK 99 billion.

The companies said they expect to complete the deal by the end of June.

--Julie Steinberg contributed to this article.

(END) Dow Jones Newswires

11-18-20 0430ET