June 19, 2001 by Canadian Underwriter
Royal & SunAlliance has sold its Canadian life operations to Maritime Life Assurance Company, the Canadian arm of U.S. giant John Hancock Life. Maritime has agreed to purchase all outstanding shares of R&SA Life, with the cash purchase price estimated at about $235 million.
The decision was based on fears that R&SA Life “may not have the scale to compete successfully as the life insurance sector continues to consolidate”, states Bob Gunn, group director of the Americas for Royal & SunAlliance Insurance Group and chair of R&SA Life. R&SA Life is the 15th largest lifeco in Canada, and last year had total assets of $1 billion, segregated funds of a further $1.1 billion and net assets of $149 million. Maritime Life is among the top ten lifecos nationally, with total assets under management of $11.5 billion.
“The sale of our life operations is consistent with the decisions taken in the U.S. and other countries to exit the life business in territories where we have no realistic opportunity of becoming a major player,” Gunn adds.
Gunn did stress that Royal will continue to be a player in the Canadian p&c market. “We have been in Canada since Confederation and our general insurance group is one of the leading groups in the country.” He says the sale will allow the company to grow its p&c operations.
The deal means that Maritime will receive not only the life operations, but all operations of Royal & SunAlliance Financial, including guaranteed interest savings, retirement products and segregated funds business. Maritime says it will keep at least 100 of the 150 employees of R&SA Life.
The sale, subject to regulatory approval, is expected to close this fall.