Financial co-operative Desjardins Group announced Wednesday that it is acquiring the Canadian division of State Farm Life Insurance Co.
The move will transform Desjardins into Canada’s second-largest property and casualty insurer behind Canadian Intact Financial Corporation, raising the company’s premiums from $2-billion to $3.9-billion.
Changes for local customers and insurance brokers in St. Albert are not anticipated, said a spokesperson for State Farm. Rather, the company expects that the agreement will lead to new job creations in the coming years.
“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, president of the Desjardins Group in a press release Wednesday.
State Farm Canada, which is primarily an auto insurance business but also provides home and life insurance services, has more than 1,700 employees providing insurance services in Ontario, Alberta and New Brunswick, with two offices in St. Albert.
State Farm has been in Canada since 1938 and has about 1.2 million customers. Once the deal is complete, Desjardins will own a nine per cent share of Canada’s property and casualty insurance market.
Leroux added that the agreement provides the foundation for exploring “additional opportunities for even greater collaboration in Canada in the future.”
While the company did not disclose information regarding the cost of the agreement, Desjardins announced that three groups will contribute capital back into the mutual business to grow the company’s home and life insurance services.
Desjardins Group will contribute $950-million. State Farm will invest $450-million, and Crédit Mutuel, a France-based co-operative bank insurer, will add $200-million.
Both Desjardins and State Farm will continue to run independently until the regulatory approval of the deal takes place in January, 2015. Desjardins will also continue to operate State Farm Canada businesses under the State Farm brand for an agreed period.
Local State Farm agents were not able to comment at this time.
