Aviva Canada and RBC Insurance have signed a 15-year strategic agreement – which includes Aviva Canada’s $582 million purchase of RBC General Insurance Company – that will provide RBC Insurance’s existing and future customers access to a full suite of property and casualty products.
“Through this agreement, Aviva Canada will provide policy administration and claims services, and RBC Insurance customers will be able to access Aviva Canada’s full suite of p&c products,” notes a statement Thursday from Aviva Canada. “RBC Insurance will continue to market and sell these products under the RBC Insurance brand,” Aviva Canada reports.
RBC General Insurance Company includes certain home and auto insurance manufacturing capabilities, such as claims, underwriting and product development, RBC notes in a separate statement.
“This is a landmark deal which underlines our confidence in a key market for Aviva, and one where we see future growth,” Maurice Tulloch (pictured right), Aviva plc’s chairman, Global General Insurance, says in the Aviva Canada statement.
“Partnering with RBC Insurance to provide their customers with a broad range of general insurance products, backed by the latest digital technology and world-class claims and underwriting, extends Aviva’s leadership in general insurance,” Tulloch goes on to say.
Aviva Canada will pay RBC Insurance $582 million upon closing. The transaction is expected to close in 2016 Q3, subject to customary closing conditions, including receipt of required regulatory approvals.
“A net after-tax gain on the transaction is currently estimated at $200 million. The net gain is based on current estimates and subject to change,” notes the RBC press release.
With the addition of the existing RBC Insurance home and auto business, Aviva Canada reports that its market position in Canada is further strengthened. It is expected that insurer’s gross written premiums, which were $3,959 million in 2015, will increase by approximately $800 million.
“RBC Insurance is one of the fastest growing direct-to-consumer home and auto insurance providers in Canada and this partnership will allow us to maintain our deep client relationships, while offering a full suite of property and casualty insurance products,” says Neil Skelding (pictured below), president and CEO of RBC Insurance.
The move will further allow RBC Insurance to “focus on and invest in areas where we see the greatest potential for growth, including our life, health and wealth insurance offerings,” Skelding continues.
“This partnership is a fantastic addition to Aviva Canada, diversifying our distribution alongside our highly valued 1,500 independent brokers,” comments Aviva Canada CEO Greg Somerville (pictured below right). “This is consistent with our strategy to provide consumers with choice about how they access insurance solutions,” Somerville adds.
Related: RBC reports $958 million in P&C insurance revenue in 2015
Through the acquisition, approximately 575 RBC Insurance employees currently involved in underwriting, claims and other key functions will become part of Aviva Canada’s operations upon completion of the transaction.
“There is no change for policyholders at this time,” RBC reports, adding that RBC Insurance “will continue to be the insurer and provide assistance and claims settlement services for existing policyholders until the transaction closes.”
Aviva Canada is one of Canada’s largest p&c insurance groups – offering home, auto and business insurance to more than three million customers – as well as being the second largest general insurance business in the U.K.-based Aviva Group. With more than four million clients globally, RBC Insurance – through its operating entities – provides a wide range of travel, life, health, home, auto, wealth and reinsurance products and solutions, as well as creditor and business insurance services to individual, business and group clients.