London Insurance Group Inc. has signed a definitive agreement to sell its interest in London Guarantee Insurance Company, to The St. Paul Companies of Saint Paul, Minn.

St. Paul will pay US$80 million for the stake. The transaction is expected to close within three to five months, subject to regulatory approval and the satisfaction of certain conditions as contained in the agreement.

London Guarantee is a specialty property-liability insurance company, focused on providing surety products, and management liability, bond and professional indemnity products. It is currently the number two underwriter of surety products and number two underwriter of financial and professional services products in Canada.

The company generated more than $65 million in net written premiums in 2000, of which $43 million were surety premiums, and $19 million were financial and professional services premiums. London Guarantee has 200 employees. “This acquisition represents a significant strategic investment for The St. Paul in Canada,” said Douglas Leatherdale, chairman and CEO of The St. Paul Companies.

“These businesses were not core to Great-West Lifeco’s Canadian Operations,” said Ray McFeetors, co-president and CEO. “Therefore after strategic review, it was determined to exit the business conducted by London Guarantee.”

The St. Paul Companies’ Canadian surety operation, Northern Indemnity, will be merged into London Guarantee, and London Guarantee will eventually become part of St. Paul Canada. Kent Urness, executive vice president International Insurance Operations, said the acquisition of London Guarantee is key to furthering The St. Paul’s Financial and Professional Services’ specialty strategy in Canada. “We want to be the leading provider of financial and professional services products in all our territories of interest.”