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Aviva Plc, the U.K.’s second-biggest insurer by market value, agreed to buy a home and auto insurer from Royal Bank of Canada for C$582 million ($402 million) to expand in North America.
The purchase will increase Aviva’s policy sales in Canada by about C$800 million, up from almost C$4 billion in 2014, the buyer said Thursday in a statement. The companies also agreed to a 15-year deal in which other Aviva products will be made available to customers of the Toronto-based bank. About 575 employees of Royal Bank will become part of the London-based insurer.
Aviva Chief Executive Officer Mark Wilson, who joined in 2013 to turn around the insurer, has been reshaping the company through deals, including the purchase in 2015 of Friends Life Group Ltd. for more than $8 billion, which was the biggest acquisition the U.K. insurance industry had seen in 15 years. He’s also sold units from Spain to Russia.
“This new partnership extends Aviva’s presence in general insurance, brings additional diversification benefits to the group and presents excellent opportunities for revenue and earnings growth in the attractive Canadian market,” Wilson said in a separate statement.
Aviva climbed 3.1 percent at 1:40 p.m. in London.
The sale allows RBC Insurance to focus on lines such as life and health coverage and will probably be completed in the third quarter, according to the bank’s statement. The seller expects to record a net gain on the transaction of about C$200 million.
Royal Bank CEO David McKay said in March that he was reviewing property & casualty operations, citing difficulties caused by Canadian rules that ban banks from selling coverage in branches.
“It’s a very volatile business,” he said at the time. “We’re under scale in property and casualty in the Canadian marketplace.”
–With assistance from Doug Alexander, Lily Katz and Sarah Jones.