Manulife makes blockbuster buyout

Manulife Financial Corporation announced a $4-billion deal in Quebec, buying out the operations of one of that province’s insurance giants.

Risk Management News

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Manulife Financial Corporation announced a $4-billion deal in Quebec, buying out the operations of one of that province’s insurance giants.

Manulife Financial Corporation (MFC) announced late yesterday that The Manufacturers Life Insurance Company (MLI) and Standard Life Oversea Holdings Limited, a subsidiary of Standard Life plc, have entered into an agreement under which MLI will acquire the Canadian-based operations of Standard Life plc for approximately $4 billion in cash at closing, subject to certain adjustments.

“Several months ago, Standard Life decided to explore the sale of its Canadian operations through a competitive process,” said Donald A. Guloien, President and Chief Executive Officer, Manulife. “We are delighted to be named the successful bidder.”

This transaction significantly builds our capability to serve customers in all of Canada, and elsewhere in the world, from Quebec. Examples of this include Group Benefits, Group Retirement, several areas of Asset Management, Investment Risk Oversight and the growing and important field of Liability-Driven Investing, as well as others.

“Excluding transition and integration costs, after the first year we expect the transaction to be accretive by approximately 3¢ to EPS per year over each of the next three years,” added Guloien. “It will also increase our earnings capacity beyond our 2016 core earnings objective of $4 billion. This transaction, and the financing, maintain our strong capital position, and in no way inhibit our ability to pay dividends. In fact, it will enhance our ability to increase dividends in the future. The transaction will improve core earnings, however the transition costs reported in core earnings will create a modest, temporary headwind on our core ROE objective of 13 per cent.” (continued.)
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With respect to Standard Life's operations in Quebec, Guloien said “One of the key reasons we were interested in this company is its people in Quebec: we want to increase our presence in the province and use the very talented employee base to grow and expand our business in Quebec, throughout Canada and indeed the world.”

“This transaction also allows us to leverage Standard Life's strong presence, and deep understanding of the unique attributes of the Quebec market,” said Marianne Harrison, Senior Executive Vice President and General Manager, Canadian Division, Manulife.  “We will build on Standard Life's nationally-recognized expertise in many aspects of financial services.”

To learn more of how the deal will change the life insurance landscape in Canada, look in the next Canadian Life newsletter on Tuesday.

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