Canada Life in Agreement with Crown Life;
Regina - May 26, 1998
Strong Presence in Regina to Continue
- Canada Life and Crown Life today announced the two companies have reached an agreement whereby Canada Life will acquire Crown Life's individual and group insurance operations in Canada. Under a comprehensive agreement, Canada Life will also acquire Crown Life's non-Canadian reinsurance operations, as well as its international operations in Hong Kong, The Bahamas and other jurisdictions. Canada Life will also substantially reinsure and administer Crown Life's insurance business in the United States.
"We are committed to achieving sound growth and financial strength in what has become a highly competitive global market," said David A. Nield, chairman, president and chief executive officer of Canada Life. "By acquiring much of Crown Life's insurance operations, we are adding new and complementary lines of business to ours and extending our presence in more markets," he said. "Crown Life's reinsurance and international operations give us new businesses and new capabilities. As well, the transaction more than doubles the individual life business administered by our U.S. operations. Most importantly, we believe the policyholders of both companies will benefit."
For Canada Life, this acquisition is the ninth in four countries since 1992. The company has made more acquisitions than any other Canadian life insurance company. Recently, Canada Life announced it was preparing a plan to demutualize in order to become a publicly traded stock company and established April 2, 1998, as the eligibility date for participation. Accordingly, Crown Life's participating policyholders would not be eligible to participate if the company proceeds with its plan to demutualize.
The transaction will ultimately increase Canada Life's total assets under administration by more than C$5 billion, to C$48 billion. Revenue premium will increase by almost $1.0 billion to $6.2 billion.
"Over the past few years we have focused on ensuring that Crown Life is on a sound footing, and now we have to look to the years ahead," said Brian A. Johnson, president and chief executive officer of Crown Life. "The fact is that today we are a solid company, yet to best serve our policyholders, and maintain a competitive and growing insurance operation in Regina, we recognized that we needed to align our insurance operations with a larger organization."
Canada Life has also committed to continuing a strong corporate presence in Regina, and expects to create new opportunities for employees of both companies as functions are realigned between that city and Toronto.
"Regina will become the Western headquarters of our Canadian Division," Nield said. "Together, the two companies have committed to maintain a minimum of approximately 700 full-time positions in the city, and as well, Canada Life will purchase Crown Life's head office in Regina. Our goal is to integrate services across Canada and expand an already strong western Canadian presence."
The agreement provides for the entering into of an option exercisable at a later date by either Canada Life or Crown Life's principal shareholders for Canada Life to acquire the common shares of Crown Life held by its principal shareholders. In the meantime, Crown Life will carry on its remaining insurance business with a focus primarily on the United States and will develop its investment management business.
Crown Life also announced that it will, subject to debenture holder and regulatory approvals and closing of the transaction with Canada Life, amend the terms of its outstanding convertible subordinated debentures to allow their retraction at par and that Crown Life's majority shareholder, HARO Financial Corporation, which holds C$149.5 million of debentures, has agreed to retract its debentures at closing of the transaction with Canada Life.
After the transaction closes, Crown Life's total assets under administration are estimated to be C$1.5 billion compared with C$6.6 billion as at December 31, 1997. Fully diluted book value per common share of Crown Life is estimated to be $110.00, compared with $92.70 as at December 31, 1997.
The CEOs of both companies said they would move as quickly as possible to seek shareholder, participating policyholder and regulatory approvals for the transactions and noted that, rating agencies of both companies have been briefed. The transaction is expected to close in the fourth quarter of 1998.
Top of Page