New Issue: IFC Straight Perpetual 5.20%

Intact Financial Corporation has announced:

that it has entered into an agreement with a syndicate of underwriters led by CIBC Capital Markets together with BMO Capital Markets, National Bank Financial and TD Securities Inc. pursuant to which the underwriters have agreed to purchase, on a bought deal basis, 5,000,000 Non-Cumulative Class A Shares, Series 5 (the “Series 5 Shares”) from Intact for sale to the public at a price of $25.00 per Series 5 Share, representing aggregate gross proceeds of $125 million.

Intact has granted the underwriters an underwriters’ option to purchase up to an additional 1,000,000 Series 5 Shares at the same offering price. Should the underwriters’ option be fully exercised, the total gross proceeds of the Series 5 Shares offering will be $150 million.

The Series 5 Shares will yield 5.20% per annum, payable quarterly, as and when declared by the Board of Directors of the Company. The Series 5 Shares will not be redeemable prior to June 30, 2022. On and after June 30, 2022, Intact may, on not less than 30 nor more than 60 days’ notice, redeem for cash the Series 5 Shares in whole or in part, at the Company’s option, at $26.00 per share if redeemed on or after June 30, 2022 and prior to June 30, 2023; $25.75 per share if redeemed on or after June 30, 2023 and prior to June 30, 2024; $25.50 per share if redeemed on or after June 30, 2024 and prior to June 30, 2025; $25.25 per share if redeemed on or after June 30, 2025 and prior to June 30, 2026; and $25.00 per share if redeemed on or after June 30, 2026, in each case together with all declared and unpaid dividends up to but excluding the date of redemption.

The Series 5 Share offering is expected to close on May 24, 2017. The net proceeds will be used to partially fund the previously announced acquisition of OneBeacon Insurance Group, Ltd. If the acquisition does not close, the net proceeds will be used for general corporate purposes.

They later announced:

that due to strong demand, the underwriters have exercised their option to purchase an additional 1,000,000 Non-Cumulative Class A Shares, Series 5 (the “Series 5 Shares”), which increases the size of the previously announced offering to 6,000,000 Series 5 Shares in aggregate, to be offered on a bought deal basis to a syndicate of underwriters led by CIBC Capital Markets together with BMO Capital Markets, National Bank Financial and TD Securities Inc. The Series 5 Shares will be issued at a price of $25.00 per Series 5 Share, representing aggregate gross proceeds of $150 million. The Series 5 Shares will yield 5.20% per annum. The Series 5 Share offering is expected to close on May 24, 2017.

Intact recently raised $754-million to fund its purchase of OneBeacon Insurance Group, Ltd..

As this issue is not NVCC compliant, it will be analyzed as a DeemedRetractible. Note, however, that this carries more uncertainty than it does with most other insurers because Intact is a P&C insurer, not a life company.

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