CGU sells Canadian lifecos for $297 million

CGNU’s Canadian holding company CGU has disposed of its equity stakes in Commercial Union Life and Norwich Union for a total of $297 million. Commercial Union was sold to Manulife Financial for $138 million and Norwich Union to a subsidiary of the American International Group (AIG) for $159 million. Both deals are subject to regulatory approval and should be completed by the end of the first quarter of this year, CGU says in a press statement. “CGNU plc will focus in Canada on enhancing returns from its leading property and casualty interests, CGU Group Canada Ltd., and Pilot Insurance Co., which combined rank number one with a 12% share of the market.”

CGNU sold all of its U.S. property and casualty insurance interests toward the end of last year for US$2.1 billion. The purpose of doing so came about from a global study of the group’s markets in an attempt to identify areas where it can focus on becoming a “top five player” in the general, life and investment insurance business. It was felt that CGNU’s position in the U.S. property and casualty insurance markets provided limited opportunities. Likewise, the decision by CGNU to divest of its Canadian life companies was made on the same basis, says CGU president Mark Webb.

Although CGNU’s global life and investment operations are expected to deliver stronger growth in coming years, the uniquely dominant position the group holds in the Canadian p&c marketplace prompted the decision to focus on general insurance, Webb notes. CGU will not be looking to pursue aggressive growth opportunities this year, he adds, but rather at achieving sustainable profitability.