March 1, 2004 by Canadian Underwriter
The insurance operations of HSBC Bank Canada, known as Canadian Direct Insurance Inc., have been acquired by Canadian Western Bank. The deal involves a cash payment of $25.4 million, reflecting a 25% premium over book value of the HSBC insurance operations. The deal is subject to regulatory approval.
Canadian Direct will continue to operate as a stand-alone entity with its current staff and management, notes CEO Brian Young. “Being acquired by Canadian Western Bank is a winning situation for all parties involved. Employees are retained, customers continue to have a choice, and Canadian Direct will carry on business under our current model, which has been key to our success.”
Canadian Western Bank says it expects the insurer to contribute significantly to earnings in the immediate term. For 2003, Canadian Direct posted net earned premiums of $36 million, ending the year with balance-sheet assets of $105 million. For the first three quarters of 2003, Canadian Direct posted net income of just over $1.2 million, more than double its earnings from the 2002 financial year. Young says the company plans to double its earnings for 2004. He is also targeting aggressive customer growth based on the company’s high level of claims satisfaction, which has consistently reached 98%. The sale is expected to close by mid-April.