Clarica Life Insurance Co. executives have made a near clean sweep of the key appointments to run the combined Canadian retail operations of their company and would-be new owner Sun Life, documents obtained by The Globe and Mail show.
Some people familiar with the development say it mostly reflects the fact that while Clarica, which is based in Waterloo, Ont., is much smaller over all than Sun Life Financial Services of Canada Inc., its domestic individual life insurance business -- the key attraction for any acquirer -- has been much more successful.
Sun Life is more that twice as big as Clarica, with a market capitalization of $14.7-billion.
But figures it provided when it unveiled its friendly $6.8-billion bid for Clarica on Dec. 17 showed Clarica ranked second in the Canadian individual life insurance market in 2000 with a 15-per-cent market share, while Sun Life ranked a distant fourth with 6 per cent.
One source said the people who have run Sun Life's Canadian individual businesses have failed to make the grade. "The hard reality is that if the players on your team aren't able to get you where you need to be, then you need to change the players," he said. "And that's exactly what's happening."
However, he also said the Clarica coup has left some of Sun Life's Toronto-based Canadian management team "in shock" and with a feeling of "really profound disappointment." They are comparing the situation with what is only half-jokingly veiwed by many industry players as a reverse takeover of Toronto-Dominion Bank's retail operations by much smaller Canada Trust following its acquisition by TD two years ago.
To add insult to injury, some Clarica officials are apparently being less than diplomatic about the matter. "There is a huge sense that the people at Clarica are taking a kind of triumphalist view: 'We won, you lost,' " he said.
He and other sources also indicated that there are growing concerns among Sun Life's employees that the bulk of the 1,500 positions that are to be cut from the two companies' combined Canadian work force of 8,600 will come from their ranks.
The internal discontent comes as Sun Life is also running into problems persuading the 1,300 independent agents who sell its individual insurance and wealth management products -- along with those of many other companies -- to give up their independence and be merged into Clarica's 3,200-member "captive" sales force.
Sun Life still requires regulatory and government approvals for the Clarica deal, which it hopes to close next month.
The only key appointment the companies have so far announced publicly is that of Clarica chief executive officer Robert Astley, who is overseeing the integration of the two companies and will head their merged Canadian businesses.
However, internal company memoranda obtained by The Globe show that candidates from Clarica will also occupy the vast majority of other senior positions in the combined Canadian individual life operations, assuming the deal closes.
Barry Triller, currently Clarica's executive vice-president of Canadian customers, will head the Clarica/Sun Life retail business in Canada, again as executive vice-president. What's more, seven of 10 senior management appointments Mr. Triller announced internally last week also have gone to executives from the Waterloo company.
By contrast, appointments announced a month ago along with that of Mr. Triller show that on the Canadian group business side, where Clarica is less of a force, Sun Life executives have won out. Greta Cusworth will continue to run the group benefits business as vice-president, while Kevin Dougherty will remain in charge of group retirement services, also as vice-president.
Mr. Astley dismissed the reverse takeover notion, and denied industry rumblings that he had been given a free hand to do whatever he wants with the Canadian businesses by his Sun Life counterpart Donald Stewart as a quid pro quo for agreeing to the takeover.
The management selections, he said, have been "completely even-handed," with the objective being to "pick the best individuals for leading the company going forward."
He said that candidates from Sun Life have dominated management appointments in other areas besides the group businesses, including the corporate office and corporate information technology, and international operations, a key strength for Sun Life.
Clarica has only a small U.S. operation, while Sun Life's U.S., British and Asian businesses accounted for $657-million of the $881-million in profit it reported last year.
As for fears among Sun Life employees that they will bear the brunt of the job losses, Mr. Astley insisted that there is "no preordained split" about where the cuts will be made and that any "expectations" about this are "just speculation at this point."
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