Desjardins Group has signed an agreement to purchase State Farm Canada’s businesses in life and property and casualty (P&C) insurance, as well as its Canadian mutual fund, loan and living benefits companies.
As part of the agreement, Desjardins Group’s life and health Insurance subsidiary, Desjardins Financial Security, and certain other Desjardins units will allocate capital of $250 million for the life insurance, mutual fund, loan and living benefits components. State Farm will make a $450 million investment in non-voting preferred shares into Desjardins Group’s post-closing property and casualty insurance business, which will include the newly acquired State Farm Canada property and casualty operations. In addition, Crédit Mutuel, a major European cooperative financial group and long-term partner of Desjardins Group, will invest $200 million. Desjardins Group will allocate capital of approximately $700 million to support the growth of its P&C business.
The transaction strengthens Desjardins Group’s position as the fourth-largest life and health insurer in Canada. It will also become the second largest P&C insurance provider in the country.
The deal is expected to close in January 2015, subject to approval from regulators and compliance with customary closing conditions.
Following the closing, Desjardins will operate the newly acquired State Farm Canada businesses under the State Farm brand for an agreed license period.