Canadian Underwriter

Desjardins Group to raise $500 million through capital share issue

January 20, 2014   by Canadian Underwriter

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 In order to “boost” its capitalization, Desjardins Group of Levis, Que. announced Monday it is issuing $500 million worth of capital shares.

“Desjardins ranks among the most stable financial institutions in the world and this is in large part thanks to its capitalization,” stated Monique F. Leroux, Desjardins Group’s chair of the board, president and chief executive officer. “This advantage also protects the company from economic fluctuations while allowing for growth which benefits its members and clients.”

The announcement comes five days after Desjardins announced it agreed to acquire State Farm Canada’s businesses in property and casualty insurance. The same day, Desjardins said it would “allocate capital” of about $700 million to “support the growth of its P&C business.” 

Desjardins Group to raise $500 million

 The $500 million worth of new capital shares “are issued by the Fédération des caisses Desjardins du Québec and sold through the caisse network,” the company stated. “The shares are issued in order to boost the capitalization of the caisses and Desjardins Group.”

Desjardins Group already offers P&C through Desjardins General Insurance Group. In Ontario, Alberta and Quebec, DGIG provides auto, property, pet, motorcycle and recreational vehicle coverage. In Quebec, DGIG also provides business insurance, including auto, property, equipment breakdown, loss of business income and liability.

In addition to State Farm’s P&C business in Canada, Desjardins Group also agreed to acquire State Farm Canada’s life insurance, mutual fund, loan and living benefits companies.

In addition to Desjardins General Insurance Group, Desjardins Group also owns Western Financial Group Inc. of High River, Alta., whose operations include a broker network with more than 100 offices in British Columbia, Alberta, Saskatchewan and Manitoba, plus Western Direct Insurance, a pet insurance carrier (Western Financial Insurance Company) and Western Life (originally the Canadian arm of Federated Mutual).

The interest rate for the new capital shares will be set annually “and may not exceed the greater of the average annual yield for 5-year Government of Canada bonds or 4.25%.”

Desjardins Group’s other lines of business are personal and business banking, as well as investing services including a full service brokerage and mutual funds.

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