Canada's RBC to Sell Home and Auto Insurance Unit to Aviva
January 21 2016 - 09:13AM
Dow Jones News
By Judy McKinnon
Royal Bank of Canada said Thursday it had agreed to sell its
home and auto-insurance operations to the Canadian arm of U.K.
insurance provider Aviva PLC for 582 million Canadian dollars
(about $402 million).
As part of the deal, the Canadian lender said it has reached a
15-year agreement with Aviva Canada under which RBC customers can
access all of Aviva's property and casualty products.
The bank, Canada's second-largest lender by assets, said the
sale of its RBC General Insurance Co. unit, which includes claims,
underwriting and product development, will result in about 575
employees moving to Aviva.
RBC had been reviewing its domestic
property-and-casualty-insurance business. Since federal rules
prevent banks from selling insurance products inside their
branches, distribution has proved a challenge. Lenders instead are
required to set up separate insurance offices to sell coverage.
The deal allows RBC "to focus on and invest in areas where we
see the greatest potential for growth, including our life, health
and wealth insurance offerings," RBC Insurance Chief Executive Neil
Skelding said in a statement.
RBC said it expects to record an after-tax gain of about C$200
million on the deal, which is expected to close in the third
quarter.
"This is a landmark deal which underlines our confidence in a
key market for Aviva, and one where we see future growth," Maurice
Tulloch, chairman of Global General Insurance at Aviva, said in
separate statement.
Aviva said the addition of RBC's home and auto business will
bolster its Canadian gross written premiums by about C$800
million.
RBC said it would continue to be the insurer and provide claims
settlement services for existing policyholders until closing of the
deal.
Write to Judy McKinnon at judy.mckinnon@wsj.com
(END) Dow Jones Newswires
January 21, 2016 08:58 ET (13:58 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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