* Intact to keep Canada and UK, Tryg to take Norway, Sweden
* Offer made Oct 2 at 50% premium to share price
* RSA board minded to accept
(Adds premium to share price, background, analyst comment)
By Carolyn Cohn and Pamela Barbaglia
LONDON, Nov 5 (Reuters) - RSA said it is in talks
with a consortium of Canadian insurer Intact Financial
and Danish insurer Tryg about a possible break-up deal
that values the British firm at 7.1 billion pounds ($9.3
billion).
RSA said its board would be minded to recommend the proposal
for 685 pence in cash per RSA share, plus the payment by RSA of
its previously announced interim dividend of 8 pence per share.
RSA said it received the proposal on Oct. 2, which values
the home, motor and commercial insurer at a premium of 50% to
its closing price on Oct. 1.
Intact and Tryg have until Dec. 3 to make a firm offer.
Shares in RSA shot up 46% to close at 670 pence on Thursday.
Jefferies analysts said the offer price represented "more
than fair value".
Robey Warshaw, Goldman Sachs and Bank of America are working
with RSA on the deal, the insurer said.
Best known in Britain for its More Than brand, RSA also has
large operations in Canada, Ireland and Scandinavia.
Under the terms of the deal, Intact will keep RSA's Canada
and UK & International operations, while Tryg will take control
of RSA's Sweden and Norway business. Intact and Tryg would
co-own RSA's Denmark business.
RSA appointed Christian Baltzer, a former CFO of Tryg, as
head of its Danish business last year.
The insurer has been open to offers since 2015 when a
previous bid approach by Zurich Insurance fell through,
industry sources say. Both Intact and Tryg have been mooted as
potential bidders for several years.
RSA Chief Executive Stephen Hester, a former boss of NatWest
who joined RSA in 2014, has been scaling back underperforming
business.
Rising commercial insurance rates, lower non-pandemic
related claims and a tightening up of its underwriting strategy
boosted RSA's underwriting profit in the first nine months of
2020, despite the impact of COVID-19, it said earlier.
RSA's combined ratio, a measure of performance in which a
level below 100% indicates a profit, stood at 90% in the third
quarter, compared with 93.6% at the end of 2019.
The insurer said it was revising down its initial estimate
of the gross impact of a September judgment in a UK test case
brought by the British markets regulator around the payment of
business interruption insurance by around 20 million pounds.
($1 = 0.7641 pounds)
(Reporting by Carolyn Cohn and Pamela Barbaglia, editing by
Mark Potter and Elaine Hardcastle)