An industry that has become known for constant takeovers and mergers is witness to another major takeover today by Canada’s leading cooperative financial group.
Desjardins Group announced that it has entered into an agreement to purchase State Farm Canada's businesses in property and casualty and life insurance, as well as its Canadian mutual fund, loan and living benefits companies.
“This acquisition will allow Desjardins to develop a broader, multi-channel distribution network across the country, while continuing to meet the needs of State Farm's Canadian client base,” said Monique F. Leroux, chair of the board, president and chief executive officer of Desjardins Group. “At the same time, it will enhance our position in Canada by expanding our customer reach and achieving economies of scale.”
As a result of the transaction, Desjardins Group will become the second largest P&C insurance provider in Canada with annual gross written premiums of approximately $3.9 billion, up from approximately $2 billion. The transaction also strengthens Desjardins Group's position as the fourth largest life and health insurer in Canada.
The transaction is expected to close in January 2015, subject to approval from regulators and compliance with customary closing conditions. Following the closing, Desjardins will operate the newly acquired State Farm Canada businesses under the State Farm brand for an agreed license period.
State Farm will make a $450 million investment in non-voting preferred shares into Desjardins Group's post-closing property and casualty insurance business, which will include the newly acquired State Farm Canada property and casualty operations. (continued on Page 2)