CIBC rumours persist

The federal government’s recently released paper outlining the future of financial institutions in Canada did little to quell market rumours surrounding a potential sale of CIBC Insurance. The company, originally tabbed to be sold to U.S.-based GEICO Insurance, is now allegedly being sought by General Motors of Canada (GM). The two companies would be a natural fit, says market observers, who note the government’s decision to target tied and coercive selling practices would do little to dissuade GM from acquiring the insurer. “With the banks trying their best to get into automobile leasing, there is a natural inclination from the automobiles manufacturers to get into insurance. This might be motivating GM,” says one observer. General Motors officials were unwilling to comment on the rumoured acquisition.

Adding fuel to the flames is John Hunkin, CIBC’s new chairman, who recently addressed initiatives the bank plans to undergo to increase shareholder returns. His address concentrated on CIBC’s forays into electronic banking and wealth management, not once touching upon the bank’s insurance branch. Hunkin is reportedly not a fan of the operation and has tabbed it for sale — the operation is seen across the organization as being the child of Hunkin’s competition for the chairmanship, Holger Kluge.

CIBC Insurance’s direct written premiums were at $306.5 million in 1998, up from 1997’s $275.4 million.