The deal facilitates the creation of a major broker platform in Ontario, Canada. Credit: Scott Graham on Unsplash.

Definity Financial subsidiary McDougall Insurance Brokers has purchased 100% of the shares of McFarlan Rowlands Insurance Brokers and its affiliated firms in a C$232m ($174m) deal.

Founded in 1896, McFarlan Rowlands is an insurance brokerage firm that employs more than 200 people in 18 offices across southwestern Ontario, Canada.

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The company also has over $200m in annual premiums.

McFarlan Rowlands primarily offers property and casualty brokerage solutions, as well as claims adjusting and life and group benefits brokering services.

Comprising both cash and share considerations, the latest deal facilitates the creation of a combined entity with more than $700m in annual premiums, 670 employees and 56 offices.

The deal will also enable McFarlan Rowlands’ incremental annual distribution income to grow Definity’s expected operating income from broker investments from around $40m to nearly $60m before finance costs, taxes and minority interests.

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The cash portion of the deal was financed through a combination of excess capital and debt, while the remaining part was completed by issuing McDougall’s shares to McFarlan Rowlands shareholders.

Following the deal’s completion, Definity’s ownership interest in McDougall remains at 75%.

The consideration of the deal remains subject to the closing and post-close adjustments.

McDougall CEO Ross McDougall said: “McFarlan Rowlands is a high-performing brokerage led by a seasoned management team with a well-known brand and a long track record of value creation.

“The Definity and McDougall broker platform model, including its focus on shared ownership, continues to drive strong interest from the broker community.”

The latest deal comes seven months after Definity bought a majority stake in McDougall for $160m in cash.