Insurer Mergers and Asset-Release Notices

Summary#

The Canada Gazette published three corporate notices. They announce (1) a plan to merge four insurers into a single company called Definity Insurance Company, (2) a proposed amalgamation that would fold several HSBC entities into Royal Bank of Canada, and (3) an application by United American Insurance Company to release the assets it holds in Canada.

What it does#

• Definity Insurance Company, Perth Insurance Company, The Missisquoi Insurance Company and Waterloo Insurance Company intend to apply under the Insurance Companies Act (Canada) for letters patent to combine into one company named Definity Insurance Company / Compagnie d’assurance Definity. They plan to file on or after June 26, 2023. The proposed effective date is January 1, 2024, or another date fixed in the letters patent.
• Royal Bank of Canada is joining with HSBC Bank Canada, HSBC Trust Company (Canada), HSBC Mortgage Corporation (Canada) and HSBC Finance Mortgages Inc. to seek letters patent under the Bank Act (Canada) to continue as Royal Bank of Canada / Banque Royale du Canada. That application is to be made on or after July 8, 2023 and is conditional on RBC completing a planned purchase of all the shares of HSBC Bank Canada from HSBC Overseas Holdings (UK) Limited (share purchase agreement dated November 29, 2022). The amalgamation would take effect only after that acquisition is completed.
• United American Insurance Company plans to ask the Superintendent of Financial Institutions (Canada), under the Insurance Companies Act (Canada), for an order to release the assets it keeps in Canada. The company intends to apply on or after July 22, 2023. Anyone who is a policyholder or creditor and objects may file an opposition by mail or email on or before July 22, 2023 (address and email were provided in the notice).

Who's affected#

• Customers, policyholders and creditors of the four insurers that plan to merge (Definity Insurance Company, Perth Insurance Company, The Missisquoi Insurance Company, Waterloo Insurance Company) may notice a change in the corporate name or structure.
• Customers, account-holders, mortgage clients, shareholders and employees connected to HSBC Bank Canada and the other HSBC entities — and Royal Bank of Canada customers and shareholders — are affected because that amalgamation depends on a share purchase and regulatory approvals.
• Policyholders and creditors of United American Insurance Company in Canada are directly affected because the company is asking to release its Canadian assets. They have until July 22, 2023 to file an objection.
• Federal regulators (the Minister of Finance and the Superintendent of Financial Institutions (Canada)) are the decision-makers on these applications.

Why it matters#

• Merging companies can change who people deal with for insurance or banking. That can affect where paperwork is sent, which company is legally responsible for policies or accounts, and who handles claims or customer service.
• The bank-amalgamation notice is conditional on a share purchase. That means the change will only happen if the acquisition goes ahead and if regulators approve. So customers may see no change if the deal falls through.
• The asset-release request by United American Insurance Company could mean the company is winding down its Canadian operations. Policyholders and creditors should review their situations and decide whether to object by July 22, 2023.