Newspaper article The Canadian Press

Desjardins to Grow Its Home, Auto Insurance Business with State Farm Canada Deal

Newspaper article The Canadian Press

Desjardins to Grow Its Home, Auto Insurance Business with State Farm Canada Deal

Article excerpt

Desjardins to acquire State Farm Canada

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MONTREAL - State Farm's Canadian business is being acquired for an undisclosed price by the Desjardins financial group, which expects to gain about 1.2 million customers in several provinces.

The Quebec-based financial co-operative, headquartered in Levis near the provincial capital, will operate the business as a separate unit with about 1,700 State Farm employees and 500 agents.

Desjardins expects the deal will close in about a year, in January 2015, after going through the regulatory review process.

The transaction would make it Canada's second-largest provider of property and casualty insurance, which includes home and auto coverage as it would nearly double annual premiums written to $3.9-billion from about $2-billion, Desjardins said in a statement Wednesday.

It also strengthens Desjardins Group's position as the fourth-largest life and health insurer in Canada, it added.

The deal was announced jointly by Desjardins, State Farm's current owner based in Bloomington, Ill., near Chicago and Credit Mutuel, a Paris-based European financial co-operative.

State Farm will invest $450 million in non-voting preferred shares of the Desjardins Group's property and casualty business after the deal closes, while Credit Mutuel will invest $200 million.

Desjardins says it will allocated about $700 million to support growth of the property and casualty insurance business. In addition, its life and health subsidiary, Desjardins Financial Security and other units will allocate $250 million for the State Farm Canada life insurance, mutual fund, lending and living benefits operations.

"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 Leroux, Desjardins Group's president, CEO and chair of the board.

"At the same time, it will enhance our position in Canada by expanding our customer reach and achieving economies of scale. …

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