Pedestrians walk past an Aviva logo outside the company's head office in the city of London March 5, 2009.Stephen Hird/Reuters
DEAL OF THE DAY:
RBC sells insurance unit to Aviva for $582-million
Royal Bank of Canada is selling off some of its insurance business to a larger competitor in a move to offer customers more coverage while reducing risk.
Aviva Canada Inc. is acquiring an RBC division of home and auto insurance through a $582-million deal for RBC General Insurance Co. About 575 employees from RBC Insurance that handle underwriting, adjudicating claims and other activities will become part of Aviva under the agreement.
The two former rivals have also struck a 15-year arrangement allowing RBC to continue selling products under its existing brand name. RBC said its direct-to-consumer home and auto insurance business is growing, meaning more people are seeking insurance online and by phone, rather than calling a broker. This trend has been on the rise, particularly among younger customers, as the Internet and mobile phones play a greater role in the research and purchases of insurance. Story
Why RBC sold its insurance business, but loves wealth management
Too small, no scale. That's the best way to explain why Royal Bank of Canada is selling its property and casualty insurance business to Aviva Canada.
Despite RBC being the country's biggest bank, and despite having 1,275 branches from coast to coast, its P&C insurance arm never really benefited from this footprint.
Ever since the politically connected insurance industry raised a stink during the 1990s about Canadian banks selling insurance through the massive branch networks, the lenders have been banned from doing so. For a while, they got creative, with RBC opening insurance branches right next to personal banking ones, but they largely target new customers using other channels, such as the Internet or snail mail. Story
INVESTMENT BANKING
Dundee sells retail brokerage arm to Euro Pacific
Dundee Securities Ltd. is selling its retail brokerage arm as it plans to shift focus to its alternative asset management and private investment counsel lines of business.
Dundee Securities, wholly owned by Toronto holding company Dundee Corp., said Thursday that Dundee Goodman Private Wealth will be acquired by Euro Pacific Canada in a deal that will see $3.5-billion in client assets move from Dundee to Euro Pacific.
"If you chase two rabbits, then you will likely see both of them escape, and while we love the retail brokerage channel, we decided we needed to focus on another segment of our business – the alternative asset management side – where we believe there is a lot of future potential," said Richard McIntyre, executive vice-president and head of Dundee Global Investment Management.
When the deal closes, Euro Pacific will increase its overall assets under administration to $4.2-billion and triple its overall adviser head count as 78 advisers move over from Dundee. Story
JPMorgan to investment bankers: Work less
Bankers at one of Wall Street's biggest institutions got a strange directive on Thursday morning: Start taking weekends off.
In Wall Street's famously workaholic culture, that's a minor earthquake. JPMorgan Chase & Co. told its investment bankers that unless a deal is imminent, they're not expected to sacrifice their weekends to the firm, a bank spokesperson said.
The new policy, dubbed "Pencils Down," applies to more than 2,000 people working at JPMorgan's investment bank around the world, from lowly junior analysts up to managing directors.
The move is part of a slow shift by Wall Street to put boundaries on the demands made of its workers, especially younger ones. The early years of a career in investment banking have long functioned as a kind of hazing – 100-hour weeks, regular all-nighters poring over spreadsheets, weekends spent at the office – all in exchange for admission into an elite club. Story
PENSION FUNDS
CPPIB urges investors to look to companies with long-term vision
Canada's largest pension fund is calling for investors to put their money in companies that don't bow to the pressures of short-term decision making, and then ride out any market volatility that follows.
The Canada Pension Plan Investment Board has teamed up with S&P Dow Jones Indices to track businesses with the potential to deliver returns over the long haul, with the ambitious plan to influence other companies to adopt better governance and business practices. Several institutions have signed on to invest in the new S&P Long-Term Value Creation Global Index, and CPPIB expects retail investors will soon gain access through funds.
"What we've been witnessing, particularly since the financial crisis, is a situation where corporate decision making in order to meet quarterly earnings targets, in order to placate activist investors, in order to at times comply with certain regulatory conditions … is eroding, instead of creating, shareholder value," Mark Wiseman, chief executive officer of CPPIB, said on the phone from the World Economic Forum in Davos, Switzerland. The pension fund has long campaigned to get more investors to look past quarterly reporting. Story
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