Minnesota-based The St. Paul Companies (NYSE: SPC) has purchased specialty liability underwriter London Guarantee Insurance Co. from the Great West Lifeco Inc. (TSE: GWO) for about $125 million. London Guarantee is ranked second as market leader in underwriting surety business and financial/professional service products in Canada. The company’s total net written premiums for the 2000 financial year totaled $65 million, with surety business accounting for two-thirds of revenue. London Guarantee employs 200 staff. No announcement has been made by St. Paul to future staff or management changes. St. Paul CEO Douglas Leatherdale describes the acquisition as a "strategic investment" in relation to the group’s ambitions of securing top-ranking positions in the specialty underwriting markets. "This acquisition immediately increases our presence [in Canada] and expands our market in two of our more profitable specialty businesses at a fair price." It is expected that St. Paul’s surety underwriter Northern Indemnity will be absorbed into London Guarantee as a single subsidiary. Leatherdale believes the London Guarantee acquisition will provide a modest earnings gain for the 2002 financial year. Great West’s decision to sell London Guarantee was determined by the fact that the operation did not fit into the group’s long-term strategic plans, says CEO Raymond McFeetors. "These businesses [represented by London Guarantee] were not core to Great West Lifeco’s Canadian operations. Therefore, after a strategic review, it was determined to exit the business conducted by London Guarantee."