One of Canada's largest mutually held insurers is looking at a potential sale, and at least one analyst thinks Intact Financial is a likely buyer.

Economical Mutual Insurance Company said this week it plans to demutualize via an initial public offering or a sale to a strategic buyer. The price tag is likely to be more than $1.5-billion.

Economical, which insures cars, homes and businesses, has already received at least one offer, according to this report on the demutualization plan.

There could be numerous bidders, CIBC analyst Paul Holden said in a note to investors Wednesday, adding "we think the business is a good fit for Intact, based on its acquisition criteria."

A sale is a more likely outcome than an IPO, based on Mr. Holden's estimates. He said that an IPO would likely value Economical at around book value, which is $1.5-billion.

"However, we think a strategic investor with a strong underwriting platform, such as Intact, would be able to offer a premium to book value," he wrote.

A bid would likely force Intact to raise funds by selling shares. Intact has about $1-billion in capital, implying an equity issue of more than $500-million.

Economical has been battling dissident policy holders who are trying to throw out the board and launch a demutualization plan of their own.

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