Ending a period of speculation, Canadian firm Intact Financial and Denmark-based Tryg have finally struck an agreement to buy British insurer RSA for £7.2bn.

Earlier this month, RSA said that it was in talks with Intact and Tryg regarding a possible takeover.

Under the agreement reached now between the companies, Intact will retain RSA’s Canadian, UK and international (UK&I) businesses while Tryg will assume ownership of RSA’s Swedish and Norwegian operations.

Both Intact and Tryg will co-own RSA’s Danish operations on an equal basis. The Scandinavian operations of RSA will be spun-off.

Tryg group CEO Morten Hübbe said: “We believe that these businesses will continue to flourish and grow under our ownership, as we invest and leverage our expertise to help them become even more competitive and customer-focused. We share common cultures and values, particularly with regards to social responsibility, and we look forward to welcoming these companies, their people and their customers into the Tryg family.

“We also believe that this Transaction will create significant value for our shareholders. Tryg will become the largest P&C insurance company in the highly attractive Scandinavian market and one of the top-3 players in Sweden and Norway. It will make us more diversified, both in terms of geography and source of earnings.”

As per the agreed terms, Intact and Tryg will pay 685p per share or nearly £7.2bn in cash for the deal.

Tryg will provide £4.2bn of the consideration while Intact will contribute the remainder.

The acquisition bolsters Intact’s leadership position in Canada, supporting its personal lines business as well as its North American specialty lines.

The firm expects the deal to offer “significant value through growth”, with RSA’s Canadian business anticipated to account for around 75% of the value creation, UK&I operations around 20% and specialty lines around 5%.

For Tryg, the consolidation with RSA’s Swedish and Norwegian operations will lead to the formation of the largest P&C insurer in Scandinavia and make Tryg one of the top three players in Sweden and Norway.

The deal awaits shareholder and regulatory approvals, with completion expected in the second quarter of next year.

Intact CEO Charles Brindamour said: “Acquiring RSA’s strong businesses will expand our leadership position in Canada, build on our expertise in specialty lines, and provide a substantial opportunity to build on the UK and international operations.

“Intact has strong advantages in data, risk-selection and claims management that benefit our customers, and we plan to leverage these across the businesses.”