(November 8 – 15:10 ET) – The Canada Life Assurance Co. and TD Bank Financial Group are swapping assets in a move the companies say will solidify their positions in the Canadian group savings business and property and casualty insurance business.

Canada Life will acquire TD Canada Trust’s group savings business, while Meloche Monnex Inc., TD’s property and casualty subsidiary, will acquire Canada Life’s property and casualty business.

The two transactions are separate but will result in a net cash payment of CDN$75 million by TD to Canada Life. The companies say the transactions are expected to have no material impact on either company’s earnings in the first year and are modestly accretive to earnings (cash earnings for TD) thereafter. The amount of goodwill related to both transactions is immaterial, and the transactions have no material affect on either company’s capital ratios.

Canada Life is acquiring TD’s Canadian group savings business, which has assets under administration of $5.1 billion. TD’s group savings business administers defined contribution pension plans, group RSP plans, profit sharing plans and stock plans. The transaction will result in Canada Life becoming the new Canadian market leader, with combined assets under administration exceeding $10 billion.

Meloche Monnex will complete a share acquisition of Canada Life’s property and casualty subsidiary, equivalent to $150 million in written premiums. This solidifies the company’s position as the second largest direct response property and casualty insurer in the country, with a total of $525 million in written premiums and over 420,000 customers.

“This acquisition is an important part of our key strategy — to deliver strong shareholder and customer value through expansion of our core wealth management businesses,” said David Nield, chairman, president and CEO, Canada Life. “Growing by acquisition and expanding our core products are key factors to our continued success and critical components of our strategic plan.”

“This acquisition results in a significant increase in customers for our property and casualty business, and we believe it will enable us to deliver superior value,” said Ed Clark, president and COO, TD. “We remain focused on strengthening TD’s core retail financial services businesses, and expanding in areas where we see potential for high returns and growth.”

The companies say it will be business as usual for customers of both TD’s group savings and Canada Life’s property and casualty insurance businesses in the near term, with enhanced products and services available as each of the transactions unfolds.

With the integration of the two property and casualty businesses, some duplication will occur in head office functions. Both companies say they are committed to make every effort to minimize the impact for employees. Canada Life says this is an opportunity to expand its operations to London, Ontario, where it will maintain the full complement of active employees on the current group savings team.

The transactions are scheduled to close by November 30, subject to regulatory approvals.
-IE Staff