SSQ Financial Group is expanding its insurance offering by agreeing to purchase the Canadian AXA Life Insurance operations from Intact Financial Corp. for $300-million.
The transaction is the outcome of a much larger acquisition by Intact, initially announced in May, that gives it all of the Canadian operations of Paris-based AXA Group for $2.6-billion.
That acquisition was completed on Monday and Intact immediately sold the life insurance division.
SSQ said its majority shareholder, the Solidarity Fund of the Quebec Federation of Labour, will fund the acquisition.
The division will be renamed as SSQ Insurance Inc. and become a unit of SSQ.
AXA Life Insurance, which is based in Montreal, offers individual insurance products and specialty products in group insurance. The division also has offices in Toronto, Vancouver, Calgary and Dartmouth, N.S.
“The whole idea for us was to complete our portfolio of products first and also offer new products to our agents and brokers like universal life products that we were not able to offer before since we only had the segregated fund components,” SSQ chief executive René Hamel said in an interview.
It was also attracted to AXA because it is a solid, mature, well-run operation.
The deal is expected to close by year-end and is subject to normal regulatory and other conditions.
SSQ is Quebec's largest group insurance company and No. 5 in Canada. AXA is the 10th largest individual insurer in Quebec and No. 13 in Canada.
AXA represents SSQ's third acquisition this year, after buying two distributors of products with car dealerships and recreational vehicles earlier this year.
“With this major acquisition we'll take the time to do the right job, so for the time being unless there is a very good opportunity, we'll take the time to do the right things with AXA,” Mr. Hamel added.
He said one of the reasons SSQ beat other bidders for AXA was that it will be able to preserve most of AXA's 250 employees since they are complementary to its own business.
“There will be no massive layoffs. The majority of jobs will be saved,” Mr. Hamel said, noting that there will be some synergies with administrative functions.
SSQ Financial Group reported an annual income of more than $2-billion and assets under management of more than $7-billion. It has more than a million customers and 1,600 employees.
Intact chief executive Charles Brindamour said the sale of the AXA insurance business to SSQ Financial was the best value for its employees, distributors and customers.
“We have found in SSQ Financial Group a strong operator and are confident that the transaction will be most beneficial to all AXA Life Insurance stakeholders,” he said in a release.
SSQ was founded in 1944 as a health co-operative by a doctor who denounced the fact that Quebec's working class couldn't afford adequate medical care.
Coverage initially included medical consultations, but was later broadened to include surgical and hospitalization fees.
It became a company focused on group insurance in 1955, but was forced to adjust several times over the years to the introduction of private and then public health insurance.