General Accident said the move would make it the Canadian market leader, with a share of about 8 per cent. The Scottish insurer is funding the purchase by placing 13.5 million new shares with institutional investors at 488p each. Prudential will receive the balance of the price in the form of a capital distribution.
The Pru's policy is to withdraw from general insurance where it does not complement the group's main life insurance business.
Despite the problems of recession and a huge hailstorm in Calgary, Prudential made a pounds 9m profit from general insurance in Canada last year on net premium income of pounds 142m. The business made pounds 10m on pounds 70m of premiums in the first half of this year and has net assets of pounds 80m.
GA said the Pru's business was geographically well-spread and strong in Quebec, complementing its own strength in Ontario. GA hopes to cut expenses with economies of scale.
The issue of new shares - 3 per cent of GA's enlarged share capital - was underwritten by Hoare Govett and J Henry Schroder Wagg & Co.
Shares in Prudential climbed 10p to 269p while General Accident's price rose 5p to 510p.Reuse content