Royal Bank of Canada is seeking a buyer for a bulk of its US life-insurance arm a decade after it acquired the unit as part of an ambitious strategy to sell financial services in the world’s largest economy.
The bank has been working with Goldman Sachs for several months on selling the unit, which trades as RBC Insurance but is legally registered as Liberty Life Insurance, according to people familiar with the matter.
RBC, Canada’s largest bank by assets, said on Tuesday that it would not comment on speculation about the future of the insurance unit, based in South Carolina. Goldman Sachs also declined to comment.
Apart from a small travel insurance business, Liberty makes up all of RBC Insurance. The potential sale of the unit was first reported by Bloomberg.
People familiar with the sector said that RBC could struggle to attract interest in the business, as companies that had previously been buyers of individual life insurance businesses were now scaling back in that area.
RBC has said that its focus in the US is on expanding its capital markets and wealth management business. The bank is already among the world’s top 20 money managers and almost three-quarters of its capital markets business is outside Canada.
Gordon Nixon, chief executive, told the Financial Times last year that there was “no hurry because there are going to be lots of opportunities and lots of restructuring in the financial services industry over the next five years.
“So if you do something, you want to make sure it’s very sensible and very strategic.”
RBC bought Liberty in 2000 as part of a drive to expand south of the border across a broad range of activities, including retail banking, wealth management and capital markets.
The US contributed 22 per cent of RBC’s total revenues but less than 3 per cent of net income in the three months to April 30.
Its retail banking operations, centred in the south-eastern US, have been through several restructurings in a bid to staunch losses.
The insurance arm, which has assets of about $4bn and employs some 200 full-time agents, has been too small to make an impact. Revenues totalled $733m in the six months to April 30, up from $549m a year earlier. The unit has gone through several chief executives under RBC’s ownership.
Like Canada’s four other biggest banks, RBC has been relatively unscathed by the financial crisis.
Saturday, August 14, 2010
Are Life Insurers Playing Fair?
Every day, it seems, another lawmaker or regulator is calling for a probe of how life insurers pay out death benefits.
One concern: whether beneficiaries understand their options for getting money due when an insured person dies.
Often insurance firms put policy proceeds into interest-bearing accounts and provide what many call "checkbooks" for withdrawals, rather than mailing a lump-sum check. With the checkbook, which is not the same as bank-account checkbook, the beneficiary may withdraw all or part of the money.
The checkbook approach has been around since the 1980s. But a July Bloomberg Markets magazine article put a human face on the subject—the mother of a soldier killed in Afghanistan who feels misled—bringing it widespread attention.
The industry promotes the accounts as a useful service for people too bereft to make quick financial decisions. But regulators are looking at whether insurers should be required to offer consumers a lump-sum check, whether it is appropriate for insurers to profit from the money they hold for beneficiaries and whether insurers adequately disclose that their accounts aren't insured by the Federal Deposit Insurance Corp.
One concern: whether beneficiaries understand their options for getting money due when an insured person dies.
Often insurance firms put policy proceeds into interest-bearing accounts and provide what many call "checkbooks" for withdrawals, rather than mailing a lump-sum check. With the checkbook, which is not the same as bank-account checkbook, the beneficiary may withdraw all or part of the money.
The checkbook approach has been around since the 1980s. But a July Bloomberg Markets magazine article put a human face on the subject—the mother of a soldier killed in Afghanistan who feels misled—bringing it widespread attention.
The industry promotes the accounts as a useful service for people too bereft to make quick financial decisions. But regulators are looking at whether insurers should be required to offer consumers a lump-sum check, whether it is appropriate for insurers to profit from the money they hold for beneficiaries and whether insurers adequately disclose that their accounts aren't insured by the Federal Deposit Insurance Corp.
Aviva to sell life insurance via Santander
Aviva, Britain's second-biggest insurer, said the agreement with the Spanish bank gave it access to a 25-m strong customer base.
Santander already sells Aviva's general insurance products and will add its life insurance, critical illness and income protection policies under a five-year scheme starting next June.
Santander already sells Aviva's general insurance products and will add its life insurance, critical illness and income protection policies under a five-year scheme starting next June.
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