SSQ financial group’s recent acquisition of AXA Life Insurance’s Canadian operations allows SSQ to expand its product line, accelerate its growth plans and extend its reach across the country.
“This transaction complements our product range and allows us to build on synergies in individual insurance and investment products,” says René Hamel, CEO of Quebec City-based SSQ, adding that the acquisition also fits with SSQ’s growth plans and gives the company operational presence in Vancouver, Calgary, and Dartmouth, N.S.
SSQ had announced it had reached an agreement to acquire AXA Life from Toronto-based Intact Financial Corp. on Sept. 26, with the support of its majority shareholder, Fonds de solidarité FTQ. The $300-million transaction is expected to close early next year and is subject to regulatory approval.
The sale of AXA Life, a subsidiary of AXA Canada, comes immediately on the heels of the closing of a larger transaction in which Intact has acquired the Canadian operations of Paris-based AXA Group for $2.6 billion. Intact is Canada’s largest provider of home, auto and business insurance.
AXA Life will be renamed SSQ Insurance Co. Inc. and will become an entity of SSQ Financial Group, a diversified financial services company. SSQ offers a range of group insurance products, including life, disability, health and travel insurance; investment and retirement products, such as segregated funds, guaranteed investment accounts, registered plans and mortgages; and home and auto insurance. SSQ is Quebec’s largest group insurance company and No. 5 in Canada.
SSQ was established in 1944 and is a mutual company with more than $7 billion in assets under management and $2 billion in annual revenue. The firm serves more than one million customers and has 1,600 employees. According to SSQ’s 2010 annual report, its consolidated AUM and assets under administration have grown to $6.1 billion from $3.6 billion in 2006. The firm’s consolidated premiums and premium equivalents have grown to $2.3 billion from $1.4 billion during the same period.
“Historically, our involvement in individual life insurance has been limited,” Hamel says. “[Now] we will be able to offer a wider range of products, such as universal life, which complement our existing product line in areas such as seg funds. [This will] strengthen our position as a key player in insurance, investment and retirement products.”
Beyond SSQ’s corporate strengths, one of the reasons it was successful in its bid for AXA Life is that most of the 250 employees affected by the acquisition will be retained, Hamel says, as there is no need for layoffs because the acquisition will allow SSQ to expand its operations into three other provinces as well as provide “administrative synergies” from an operational standpoint. More important, he adds, “It will broaden SSQ’s distribution network.”
The acquisition of AXA Life is a continuation of SSQ’s diversification and “growth by acquisition” strategy. “Ten years ago,” says Hamel, “we started expanding our group insurance business; and three years ago, our pensions and investment products business. We are adding complementary products.”
Earlier this year, SSQ had acquired two Quebec-based product-distribution companies: Finance Indemnisation (FTI) and Services d’encadrement des directeurs commerciaux. These companies are involved in replacement-cost vehicles, credi-tor insurance and recreational vehicles. “They are a good fit,” Hamel says. “We are already a carrier of products they offered.”
SSQ was attracted to AXA Life because it is a mature, well-run operation. For now, Hamel says, SSQ will concentrate on the successful integration of AXA Life, but will not ignore any “good opportunities” for further expansion. IE