A.M. Best Comments on Credit Ratings of Intact Financial Corporation and Its Subsidiaries Following Agreement to Acquire OneBeacon Insurance Group, Ltd.

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has commented that the Long-Term Issuer Credit Rating of “a-” of Intact Financial Corporation (IFC) (Toronto, Ontario, Canada) [TSX:IFC] and all other Credit Ratings (ratings) assigned to IFC’s subsidiaries and its issued securities remain unchanged following the announcement of IFC’s agreement to acquire OneBeacon Insurance Group, Ltd. (OneBeacon Ltd.) [NYSE:OB].

Under the terms of the all-cash deal, OneBeacon Ltd.’s shareholders will receive USD 18.10 cash per common share, which represents an aggregate cash consideration of approximately USD 1.7 billion (CAD 2.3 billion). In addition, OneBeacon debt of approximately USD 275 million will remain outstanding. The transaction has been unanimously approved by each company’s board of directors and is subject to approval by OneBeacon Ltd.’s shareholders. This acquisition is subject to standard closing conditions, including regulatory approvals, and is expected to close in the fourth quarter of 2017.

IFC intends to finance the acquisition and related transaction expenses using a combination of CAD 700 million of equity financing, approximately CAD 700 million of excess capital and approximately CAD 1.0 billion of financing comprised of bank term loans, medium term notes and preferred shares. IFC’s consistent profitability, successful track record of acquisitions and moderate financial leverage limits the company’s execution and integration risks associated with the pending acquisition.

Once the transaction is closed, A.M. Best expects that OneBeacon Ltd. will continue to operate under the same management team within IFC’s larger organization. In addition to this established management team that has a successful track record within specialty lines, the deal bolsters IFC’s Canadian business with new products and cross-border capabilities, and better positions the company to compete with North American insurers. IFC has been focusing on growing its specialty lines operations and capabilities in Canada and this transaction will create a North American leader in specialty insurance, with over $2.0 billion of annual premiums.

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best

Joel Silverthorn, +1 908-439-2200, ext. 5120

Senior Financial Analyst

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Christopher Sharkey, +1 908-439-2200, ext. 5159

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Raymond Thomson, +1 908-439-2200, ext. 5621

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Jim Peavy, +1 908-439-2200, ext. 5644

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