Northbridge sells life unit to Western Financial

Northbridge Financial the combined Canadian entities of Fairfax Financial Holdings announces it has sold its life operation, Federated Life Insurance Co. of Canada, to Western Financial Group. The $56.9 million transaction includes $20 million for Western to purchase all outstanding shares in the company, as well as $36.9 million in assumed assets and liabilities. The deal also includes a multi-year marketing agreement which will see Wesetern and Federated Holdings (parent of Federated Life and its p&c counterpart) jointly sell Federated Life products to their customers.”Western is acquiring a profitable business with an established customer base at a fair price,” says Northbridge CEO Byron Messier. When the transaction closes, the $20 million sale price will generate a pre-tax gain for Northbridge of approximately $4 million, but more importantly the sale of Federated Life will allow [Federated Holdings CEO] John Paisley and his team at Federated Insurance to increase the focus on their highly successful core commercial property and casualty business.” The sale, which is set to be completed in third quarter 2004 subject to regulatory approval, means that Northbridge is now a solely p&c operation.For its part, Western plans to keep the Federated Life operations in Winnipeg and retain its current staff and management. “The acquisition of Federated Life with its group life and health insurance business gives us the final product line of the integrated financial services package Western Financial Group has been building since 1996,” says Western CEO Scott Tannas.Western says it will finance the deal through a $5 million private placement, current cash reserves and the company’s senior debt facilities.In 2003, Federated Life wrote gross premiums of $21.7 million, and as of March 31, 2004, total assets in the company stand at $51.5 million.