The Top 5 Life Insurance Company Acquisitions
With the Sept. 3, 2014, announcement that Manulife Financial has acquired the Canadian business of competitor Standard Life for $4 billion, we couldn’t help but look back at the other mergers and acquisitions that have occurred in the insurance industry over the years, starting with this latest one.
1. Sept. 3, 2014: Manulife Financial Acquires the Canadian Segment of Standard Life
According to Financial Post Business, the Edinburgh-based sale of Standard Life’s Canadian insurance business is seen as a major step orchestrated to “reduce exposure to spread/risk income associated with insurance, while focusing on fee-based investment management.”
For their part, Manulife was “delighted” to be the successful bidder on business interests that include Standard Life’s long-term savings and retirement, as well as their group and individual insurance business. Standard Life was the 7th ranked insurance company in Canada by revenue this year with 2,000 employees, 1.4 million customers, and a strong presence in Quebec.
The deal between the two companies also includes what they call a “global collaboration agreement,” which means that Manulife will distribute Standard Life’s investment funds in Canada, the U.S., and Asia.
The deal is still pending approval from regulators.
2. January 13, 2009: BMO Financial Group Acquires AIG’s Canadian Insurance Business
In a deal worth $375 million, BMO Financial Group acquired AIG’s life insurance business in Canada, which Bill Downe, BMO Financial Group‘s president and CEO, called a “perfect extension of our existing wealth management offering and our goal to become the one-stop location for all our clients’ financial and investment needs.”
The acquisition allowed them to enhance what they could offer in the retirement, investment, and wealth management sector while expanding their offering with more innovative investment products than they had previously. Now, BMO Financial Group could complement their existing banking and BMO Nesbitt Burns investment business with an insurance arm. Also as a result of the deal, the 300 employees and 400,000 customers of AIG were absorbed by BMO Financial Group and now operate as BMO Life Insurance.
3. July 10, 2003: Great-West Lifeco Buys Canada Life
On the above date, Great-West Lifeco announced that they had acquired Canada Life. Founded in 1847, Canada Life stands as Canada’s first insurance company and it had in excess of $68 billion under management before the sale at the end of 2002.
Great-West Lifeco paid $4.2 billion in cash, 56 million Great-West Lifeco common shares, 24 million Great-West Lifeco Series E 4.80% preferred shares, and 8 million Great-West Lifeco Series F 5.90% preferred shares to holders of Canada Life Financial common shares.
All common shares of Canada Life were transferred to Great-West Lifeco’s Canadian subsidiary, Great-West Life Assurance Company, with the Canada Life brand being maintained.
This sale kicked off an acquisition spree in the early to mid 2000s that helped put Great-West Lifeco on the road to becoming the #1 insurance company in Canada by revenue in 2014 along with the acquisition below.
4. 1997: Great-West Lifeco acquires London Life
A few years before the acquisition of Canada Life, Great-West Lifeco purchased London Life and made them a subsidiary while maintaining the London Life brand — just as it did with the Canada Life sale. Both it and this London Life purchase, along with smaller acquisitions along the way, helped bolster Great-West Lifeco to its current status as Canada’s largest insurance company.
The transaction occurred a year after London Life itself purchased the Canadian business of Prudential Insurance Company of America.
5. January 15, 2014: Desjardins Group Buys the Canadian Business of State Farm
In a move that made Desjardins Group Canada’s second-largest property and casualty insurer in Canada, the company acquired the Canadian business of State Farm for an estimated $1.35 billion. Since both organizations are cooperatives owned by their clients, they did not need to disclose the financial details of the sale.
“We came to the conclusion that our preference would be to consider partnerships and transactions within the co-operative movement,” said Monique Leroux, chief executive of Desjardins Group, told The Globe and Mail.
To make up for the capital paid to State Farm, the newspaper reported that the three groups contributed capital back into the mutual business. Desjardins Group and its subsidiaries reportedly contributed $950 million. State Farm reportedly invested $450 million in non-voting preferred shares in the combined P&C business, and Crédit Mutuel, a France-based co-operative bank insurer, added $200 million.
The acquisition allowed Desjardins to achieve its stated goal of having more of a concrete presence outside of Quebec because State Farm had a network of 1,700 employees spread across Ontario, Alberta, and New Brunswick. The company now has 9% of Canada’s property and casualty market, next to Intact Insurance’s 17%.
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