Canada's RBC to Sell Home and Auto Insurance Unit to Aviva

Royal Bank of Canada said Thursday it had agreed to sell its home and auto-insurance operations to the Canadian arm of U.K. insurance provider Aviva PLC for 582 million Canadian dollars (about $402 million).

As part of the deal, the Canadian lender said it has reached a 15-year agreement with Aviva Canada under which RBC customers can access all of Aviva's property and casualty products.

The bank, Canada's second-largest lender by assets, said the sale of its RBC General Insurance Co. unit, which includes claims, underwriting and product development, will result in about 575 employees moving to Aviva.

RBC had been reviewing its domestic property-and-casualty-insurance business. Since federal rules prevent banks from selling insurance products inside their branches, distribution has proved a challenge. Lenders instead are required to set up separate insurance offices to sell coverage.

The deal allows RBC "to focus on and invest in areas where we see the greatest potential for growth, including our life, health and wealth insurance offerings," RBC Insurance Chief Executive Neil Skelding said in a statement.

RBC said it expects to record an after-tax gain of about C$200 million on the deal, which is expected to close in the third quarter.

"This is a landmark deal which underlines our confidence in a key market for Aviva, and one where we see future growth," Maurice Tulloch, chairman of Global General Insurance at Aviva, said in separate statement.

Aviva said the addition of RBC's home and auto business will bolster its Canadian gross written premiums by about C$800 million.

RBC said it would continue to be the insurer and provide claims settlement services for existing policyholders until closing of the deal.

Write to Judy McKinnon at [e-mail]

(END) Dow Jones Newswires

January 21, 2016 09:15 ET (14:15 GMT)

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