The Economical Insurance Group has signed an agreement to purchase Montreal-based auto and property insurer Federation Insurance Company of Canada, a transaction that boosts the Waterloo-based company to number five nation-wide in total premium volume. Federation’s written premium is expected to reach $200 million this year, combined, the two companies will exceed more than $1 billion in total volume. The transaction price has not been disclosed.
‘”This purchase is an excellent fit for The Group,” says Noel Walpole, Economical president.
“It is important to us that both companies operate in comparable markets and have a similar marketing strategy. Specifically, Federation’s focus on building a strong relationship with brokers mirrors that of Economical. In this competitive environment, it is important that companies maintain their relationships with brokers,” he adds.
The Federation acquisition provides Economical with an opportunity to expand into previously untapped markets. Federation has managing general agents in Newfoundland, Manitoba and Saskatchewan, provinces in which Economical does not yet have a presence.
Under terms of the agreement, Economical also acquires the net assets of the Canadian branches of Helvetia Swiss Insurance Company of Canada.
Walpole says the 52-year old Federation will continue to run as a separate entity.