Filed Under:Markets, Personal Lines

Aviva to buy Auto and Home insurance unit from Royal Bank of Canada

The British insurer is paying $402 million to the Canadian bank, which has agreed to sell certain Aviva products to its customers as part of a 15-year deal. (Image courtesy of Aviva)
The British insurer is paying $402 million to the Canadian bank, which has agreed to sell certain Aviva products to its customers as part of a 15-year deal. (Image courtesy of Aviva)

(Bloomberg) — Aviva Plc, the U.K.’s second-biggest insurer by market value, agreed to buy a home and auto insurer from Royal Bank of Canada for C$582 million ($402 million) to expand in North America.

The purchase will increase Aviva’s policy sales in Canada by about C$800 million, up from almost C$4 billion in 2014, the buyer said Thursday in a statement. The companies also agreed to a 15-year deal in which other Aviva products will be made available to customers of the Toronto-based bank. About 575 employees of Royal Bank will become part of the London-based insurer.

Aviva Chief Executive Officer Mark Wilson, who joined in 2013 to turn around the insurer, has been reshaping the company through deals, including the purchase in 2015 of Friends Life Group Ltd. for more than $8 billion, which was the biggest acquisition the U.K. insurance industry had seen in 15 years. He’s also sold units from Spain to Russia.

“This new partnership extends Aviva’s presence in general insurance, brings additional diversification benefits to the group and presents excellent opportunities for revenue and earnings growth in the attractive Canadian market,” Wilson said in a separate statement.

Aviva climbed 3.1 percent at 1:40 p.m. in London.

The sale allows RBC Insurance to focus on lines such as life and health coverage and will probably be completed in the third quarter, according to the bank’s statement. The seller expects to record a net gain on the transaction of about C$200 million.

Royal Bank CEO David McKay said in March that he was reviewing property-casualty operations, citing difficulties caused by Canadian rules that ban banks from selling coverage in branches.

“It’s a very volatile business,” he said at the time. “We’re under scale in property and casualty in the Canadian marketplace.

— With assistance from Doug Alexander, Lily Katz and Sarah Jones.

Copyright 2016 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Related

Ryan Direct Group to acquire MGA Midas Underwriting

RDG says the acquisition will give it extra capability in niche and specialist lines in home, motor and commercial.

Featured Video

Most Recent Videos

Video Library ››

Top Story

6 homeowners’ policy endorsements agents and brokers need to know

It's the insurance agent or broker's job to explain a policy to the buyer, including the available endorsements, and they need to know which endorsement best fits the client’s situation.

Top Story

Top large commercial brokers and insurers based on customer satisfaction

The key variables driving overall commercial insurance customer satisfaction are broker expertise and insurer profitablity, according to the J.D. Power 2016 Large Commercial Insurance Study.

More Resources

Comments

eNewsletter Sign Up

PropertyCasualty360 Daily eNews

Get P&C insurance news to stay ahead of the competition in one concise format - FREE. Sign Up Now!

Mobile Phone

Advertisement. Closing in 15 seconds.