CGU divests Insurance Co. PEI stake

CGU Group Canada has sold its 75% stake in the Insurance Co. of Prince Edward Island (ICPEI) for $2.7 million. The deal, which is subject to regulatory approval, was struck with the Saskatchewan Government Insurance Co. (SGI).

ICPEI’s other major shareholder, PEI-based brokerage network Cooke Holdings Inc., is said to have prompted the switch in ownership between CGU and SGI, with the latter a new player in the Maritime markets. CGU president Mark Webb confirms that the competitive objectives in terms of the future directional growth of ICPEI from CGU’s and Cooke’s standpoint had come to differ. “The long-term strategy of Cooke Holdings Inc., the minority shareholder of ICPEI, was to expand their business into other Maritime provinces through ICPEI. This strategy did not align with our own business plans as CGU already has a significant presence in the other Atlantic provinces.” Atlantic Canada accounts for about 2% of CGU’s annual revenue based on 1999 net written premiums of $202 million. The insurer claims to be the largest carrier in the Maritimes.

ICPEI ranks as the sixth largest underwriter in PEI with net written premiums in 1999 of $5.9 million (making 1999’s NWP 2-times the value of the company’s price tag). ICPEI president Charlie Cooke says SGI was approached with the deal as Cooke Holdings was looking for a partner currently without exposure in the Maritimes. SGI is said to be interested in expanding into the New Brunswick and Nova Scotia markets.

CGU chief financial officer Ross Betteridge says the insurer’s relationship with Charlie Cooke remains “amicable”. He points out that CGU’s involvement in ICPEI relates to a past investment made by the former Canadian General Insurance Co. (which was acquired during the merger of General Accident and Commercial Union to form CGU). Canadian General did not have a presence in Atlantic Canada, so the investment in ICPEI made sense, Betteridge explains. However, with CGU’s strategic interest in the Maritime markets, “we did not want to create any conflict in competition”.