CGU snaps up GAN Canada

In a deal valued at $139.5 million, CGU Canada Ltd. has purchased The GAN Company of Canada Ltd. from its French owner GAN International. GAN Canada is the 22nd largest property & casualty group in the country with net written premiums for 1998 of $195 million, amounting to just over 1% of the total market. The company writes both commercial and personal business with a third of total premiums in group insurance such as affinity groups and employer plans.

CGU, which also owns Pilot Insurance Company, is the leading insurer in Canada with roughly $2 billion in total net written premiums. While the transaction continues the industry trend of building marketshare through mergers and acquisitions, CGU executive vice president Jim Hewitt notes the company is focused on the specialty markets written by GAN Canada, in particular its affinity group book of business. Already, CGU is a leader in group business through subsidiary Traders Insurance, but the GAN Canada acquisitions provides breathing room between Traders and main competitor for the affinity group market, Meloche Monex. “GAN’s group insurance book was the main attraction. We’ve been in the group game for over twenty years and we’ve found it to be a consistently profitable business. The GAN acquisition solidifies our hold in that sector,” explains Hewitt.

With the GAN transaction — and recent forays into group by other insurers, in particular, Zurich Financial Services Group’s recent partnership with Hudson’s Bay Company — Hewitt concedes the entire industry is eyeing the group sector. “I think a lot of companies are dabbling in the business but the major competitors remain the same as they’ve been for years. GAN had been an up and comer.” With second quarter figures demonstrating crumbling investment returns industry-wide, insurers will turn to markets that offer a most cost-efficient experience. “Companies have to get their combined ratios down to the 102% range because investment income is not what it once was. At CGU we support all of the distribution channels and group insurance is turning out to be a most efficient one.”