Description
This is a document describes outlining the two valuation examples
Examples of valuations
Analysts while structuring M&A deals look at trading and transaction comparables/multiples. An example of the trading and transaction multiples for property and casualty firms in Canada and United States is depicted below: Trading Multiples
Price ($) 28- Apr- 08 Ca nadian P&C Companies (C$) ING Cana da No rthbridg e Kingsway Finan cial EGI Fin ancial Ca nadian P&C Average U.S. P &C Companies (US$) Allstate Corp Progr essi ve Corp Safeco Co rp
(4)
Marke t Cap
(1 )
Price / EP S (2 ) 20 07A 2008E
(3 )
E PS CAG R
(3)
Price / Book
ROE (LTM)
De bt / Total Capit al
Div . Yield (LQA)
200 9E
07-'09E
(C$millions)
$ 39.50 $ 34.48 $ 13.44 $ 11.50
$4,917 $1,717 $ 680 $ 115
9.8 x 5.9 x nmf 8.0 x 7.9 x
1 0.3 x 9.5 x 6.9 x 7.8 x 8.6 x
9.3 x 11 .3 x 6.6 x 7.3 x 8.6 x
2.8 % -27.5 % nmf 4.4 % - 6.8 %
1.5 5 x 1.2 1 x 0.8 0 x 1.1 3 x 1.17 x
15.4 % 22.8 % 0.4 % 16.1 % 13.7%
0.0% 0.0% 33.8% 16.1% 12 .5%
3.1 % 1.9 % 2.2 % 2.1 % 2.3%
$ 50.16 $ 18.79 $ 45.23 $ 49.35 $ 44.50 $ 21.94
$28,301 $12,860 $4,059 $2,704 $2,708 $2,107
8.3x 13.5x 6.5x 12.1x 11.6x 10.6x 10.4x
8.6 x 1 6.0 x 7.6 x 1 2.3 x 1 0.4 x 1 0.4 x 10.9 x
8.2 x 14 .6 x 7.7 x 12 .4 x 10 .2 x 9.7 x 10.5 x
0.3 % -8.5 % -8.2 % -1.5 % -2.9 % 1.6 % - 3.2 %
1.3 9 x 2.7 1 x 1.2 0 x 1.4 5 x 1.1 7 x 2.0 1 x 1.66 x
16.4 % 16.7 % 19.4 % 12.5 % 10.6 % 11.1 % 14.4%
21.7% 31.4% 17.2% 6.9% 18.2% 21.5% 19 .5%
3.3 % 3.1 % 3.5 % 4.7 % 0.9 % 2.4 % 3.0%
Me rcury G eneral Cor p Th e Ha nover In su rance Gr oup Selective Insura nce Grou p U.S. P &C Average
(1) Market Capitalizat ion is on a dilut ed basis and includes in-the-money exercisable options outstanding. (3) Based on Bloomberg estimates. Transaction Multiples (2) GAAP EPS is used for Canadian companies. Operating EPS is used for U.S. companies and excludes after-tax realized gains and losses. (4) Multiples are calculated based on the closing price a day prior t o the acquisition announcement by Liberty Mutual.
Canada
Dat e Announced
(in C$ m illions)
Acquiror Ro yal & Sun Alliance Canada Axa Canada Te ach er's Private Capita l La Capitale Assura nce s Généra les ING Ca nada Ca nadian Western Ban k Me loche Monnex To rquest Partners, Newpo rt Partners, CIBC Capital Partn ers ING Ca nada
(3) (2) (1)
Target Canadian Northern Shield Insurance Company Cita del (W inter thur Canadian Oper ation s) GCAN Insurance Co. L'Unique Co mp agnie d'Assurances G énérales Allian z Cana da HSBC Canadia n Direct Insur ance Ge rling Canad a Insurance Company Zurich Canad a Gr oup P&C
P rice ( C$m m) 75 310 150 48 370 25 80 714
Price / LTM EPS 31.7x 10.4x 10.0x 7.2 x 7.1 x 15.9x n/a n/a n/a 13.7x
P rice / Book 1.4x 1.5x 1.5x 1.6x 1.1x 1.3x n/a 1.0x 1.4x 1.3x
ROE 4 .4% 14.8% 15.0% 21.9% 15.5% 7 .9% n/a n/a n/a 13.2%
18-Oct-07 30-Nov- 05 03-Oct-05 03-Nov- 04 07-Oct-04 02-Mar-04 20-Jan-04 30-Jun-03 22-Nov- 01 Average
Libe rty Mutu al's Can adian Personal Lines Business 130 - 140
United States
Dat e Announced
(in US$ m illions)
Acquiror Ma pfre SA Mu ench ener Rueckversicher ungs The Docto rs Co DE Shaw & Co LP Liberty Mu tual Group Zu rich Financial Services American Insurance Group (AIG) Texas Pacific Group De lek Capital Ltd
Target Commerce Group In c The Midland Co S CPIE Hold ings Inc James River Group In c O hio Casualty B ristol West Ho ldings 2 1 Century Insuran ce Group Direct Ge neral Corp oration Repub lic Cos Group Inc
st
Price (US$mm) 2,3 60 1,3 04 294 563 2,7 25 712 639 432 287
Pric e / LTM EPS 10.2x 15.0x 20.0x 14.8x 12.5x 16.4x 16.3x 15.5x 14.6x 14.8x
Price / Book 1.6x 2.1x 1.4x 2.5x 1.8x 1.9x 1.9x 1.7x 1.7x 2.1x
ROE 16.1% 14.2% 6.9% 17.0% 14.0% 12.1% 11.7% 11.3% 12.0% 12.8%
31-Oct-07 17-Oct-07 16-Oct-07 11-Jun-07 07-May-07 02-Mar-07 24-Jan-07 05-Dec-06 04-Aug- 06 Average
doc_846748670.doc
This is a document describes outlining the two valuation examples
Examples of valuations
Analysts while structuring M&A deals look at trading and transaction comparables/multiples. An example of the trading and transaction multiples for property and casualty firms in Canada and United States is depicted below: Trading Multiples
Price ($) 28- Apr- 08 Ca nadian P&C Companies (C$) ING Cana da No rthbridg e Kingsway Finan cial EGI Fin ancial Ca nadian P&C Average U.S. P &C Companies (US$) Allstate Corp Progr essi ve Corp Safeco Co rp
(4)
Marke t Cap
(1 )
Price / EP S (2 ) 20 07A 2008E
(3 )
E PS CAG R
(3)
Price / Book
ROE (LTM)
De bt / Total Capit al
Div . Yield (LQA)
200 9E
07-'09E
(C$millions)
$ 39.50 $ 34.48 $ 13.44 $ 11.50
$4,917 $1,717 $ 680 $ 115
9.8 x 5.9 x nmf 8.0 x 7.9 x
1 0.3 x 9.5 x 6.9 x 7.8 x 8.6 x
9.3 x 11 .3 x 6.6 x 7.3 x 8.6 x
2.8 % -27.5 % nmf 4.4 % - 6.8 %
1.5 5 x 1.2 1 x 0.8 0 x 1.1 3 x 1.17 x
15.4 % 22.8 % 0.4 % 16.1 % 13.7%
0.0% 0.0% 33.8% 16.1% 12 .5%
3.1 % 1.9 % 2.2 % 2.1 % 2.3%
$ 50.16 $ 18.79 $ 45.23 $ 49.35 $ 44.50 $ 21.94
$28,301 $12,860 $4,059 $2,704 $2,708 $2,107
8.3x 13.5x 6.5x 12.1x 11.6x 10.6x 10.4x
8.6 x 1 6.0 x 7.6 x 1 2.3 x 1 0.4 x 1 0.4 x 10.9 x
8.2 x 14 .6 x 7.7 x 12 .4 x 10 .2 x 9.7 x 10.5 x
0.3 % -8.5 % -8.2 % -1.5 % -2.9 % 1.6 % - 3.2 %
1.3 9 x 2.7 1 x 1.2 0 x 1.4 5 x 1.1 7 x 2.0 1 x 1.66 x
16.4 % 16.7 % 19.4 % 12.5 % 10.6 % 11.1 % 14.4%
21.7% 31.4% 17.2% 6.9% 18.2% 21.5% 19 .5%
3.3 % 3.1 % 3.5 % 4.7 % 0.9 % 2.4 % 3.0%
Me rcury G eneral Cor p Th e Ha nover In su rance Gr oup Selective Insura nce Grou p U.S. P &C Average
(1) Market Capitalizat ion is on a dilut ed basis and includes in-the-money exercisable options outstanding. (3) Based on Bloomberg estimates. Transaction Multiples (2) GAAP EPS is used for Canadian companies. Operating EPS is used for U.S. companies and excludes after-tax realized gains and losses. (4) Multiples are calculated based on the closing price a day prior t o the acquisition announcement by Liberty Mutual.
Canada
Dat e Announced
(in C$ m illions)
Acquiror Ro yal & Sun Alliance Canada Axa Canada Te ach er's Private Capita l La Capitale Assura nce s Généra les ING Ca nada Ca nadian Western Ban k Me loche Monnex To rquest Partners, Newpo rt Partners, CIBC Capital Partn ers ING Ca nada
(3) (2) (1)
Target Canadian Northern Shield Insurance Company Cita del (W inter thur Canadian Oper ation s) GCAN Insurance Co. L'Unique Co mp agnie d'Assurances G énérales Allian z Cana da HSBC Canadia n Direct Insur ance Ge rling Canad a Insurance Company Zurich Canad a Gr oup P&C
P rice ( C$m m) 75 310 150 48 370 25 80 714
Price / LTM EPS 31.7x 10.4x 10.0x 7.2 x 7.1 x 15.9x n/a n/a n/a 13.7x
P rice / Book 1.4x 1.5x 1.5x 1.6x 1.1x 1.3x n/a 1.0x 1.4x 1.3x
ROE 4 .4% 14.8% 15.0% 21.9% 15.5% 7 .9% n/a n/a n/a 13.2%
18-Oct-07 30-Nov- 05 03-Oct-05 03-Nov- 04 07-Oct-04 02-Mar-04 20-Jan-04 30-Jun-03 22-Nov- 01 Average
Libe rty Mutu al's Can adian Personal Lines Business 130 - 140
United States
Dat e Announced
(in US$ m illions)
Acquiror Ma pfre SA Mu ench ener Rueckversicher ungs The Docto rs Co DE Shaw & Co LP Liberty Mu tual Group Zu rich Financial Services American Insurance Group (AIG) Texas Pacific Group De lek Capital Ltd
Target Commerce Group In c The Midland Co S CPIE Hold ings Inc James River Group In c O hio Casualty B ristol West Ho ldings 2 1 Century Insuran ce Group Direct Ge neral Corp oration Repub lic Cos Group Inc
st
Price (US$mm) 2,3 60 1,3 04 294 563 2,7 25 712 639 432 287
Pric e / LTM EPS 10.2x 15.0x 20.0x 14.8x 12.5x 16.4x 16.3x 15.5x 14.6x 14.8x
Price / Book 1.6x 2.1x 1.4x 2.5x 1.8x 1.9x 1.9x 1.7x 1.7x 2.1x
ROE 16.1% 14.2% 6.9% 17.0% 14.0% 12.1% 11.7% 11.3% 12.0% 12.8%
31-Oct-07 17-Oct-07 16-Oct-07 11-Jun-07 07-May-07 02-Mar-07 24-Jan-07 05-Dec-06 04-Aug- 06 Average
doc_846748670.doc