The Insurance and Investment Journal has obtained an internal memo by AXA Canada revealing that Intact Financial Corporation is looking to eventually sell off the book of individual life insurance it acquired when it bought AXA’s Canadian subsidiary on May 31. While potential buyers have not had time to consider the implications of Intact’s sudden purchase, several have expressed an interest in AXA’s book of life business.The internal memo from AXA says that its life insurance activities will continue on as normal. However, it raises some questions about the sale.
Once the transaction has been completed, later in the year, the individual life insurance division will look for a major partner to take over, it reads. Intact made a brief foray into the Canadian life insurance business through NN Financial Services, which became ING Life in 1999. ING sold its life subsidiary to Transamerica Life Canada the following year.
According to sources in the brokerage business who wish to remain anonymous, the most natural buyer would be medium sized players active in the family market. The names of Industrial Alliance, Empire Life, La Capitale, Equitable Life, Blue Cross, Foresters (Unity Life), and La Survivance were frequently mentioned. AXA’s life portfolio is concentrated in the family market and does not contain any savings products. The insurers mentioned above are also active in the family segment.
When contacted by The Insurance and Investment Journal, most insurers said that they had not had time to consider the situation. As a result, they did not wish to comment publicly on the transaction. However, La Capitale and La Survivance did agree to speak about the matter.
La Capitale’s CEO, Steven Ross, pointed out that he intends to double the company’s size over five years. Acquisitions are one of the ways to achieve this objective.
“The transaction took everyone by surprise, including us. We are not hiding the fact that we want to acquire, but I cannot confirm that AXA will be a target,” commented Mr. Ross. La Capitale’s CEO notes that the mutual insurer does have the capacity to acquire the portfolio, partly thanks to the financial support of one of its shareholders, Covéa.
One insurer did express doubts that Intact would sell its life insurance business to a competitor who is active in both life and general insurance. The anonymous source pointed out that the buyer could then use its new clients to compete with Intact on its own turf in the property and casualty business.
Richard Gagnon, the CEO of La Survivance, is not making a secret of his interest: he sees synergy between AXA’s business and his own. “It is obvious that we are going to take a look at the opportunity, even if we still do not have the details about Intact’s intentions. We have the capacity to acquire AXA’s life insurance business, so long as the sale does not create an unreasonable increase in price,” he said.
James McMahon, CEO of the Force Financial Excel, a managing general agency, says that he has lost a favourite provider and an important partner. “There will still be business opportunities that will result, since AXA will obviously be bought by an insurer with whom we already have a contract. What is more troublesome is the personal side. We had developed an excellent relationship with managers like Jean-François Blais and Robert Landry,” comments Mr. McMahon. He is waiting to see the results of the transaction this fall.