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September 28, 1999
Caldwell spoke Tuesday in New York at the CIBC World Market Life Insurance/Financial Services/Commercial Banking Conference co-sponsored by A.M. Best Co. "We believe demutualization will have a significant impact on the financial landscape," Caldwell said. Five mutual companies in Canada will raise between C$24 billion ($1 = C$1.46) and C$32 billion in capital as they demutualize, Caldwell said. Those companies are: -- Clarica (formerly known as Mutual Life Insurance Company of Canada), which raised C$2.25 billion with its initial public offering July 15. -- Manulife Financial, which raised C$6 billion with its IPO Sept. 24. -- Canada Life Financial, which is expected to raise C$2.69 billion with its IPO. -- Industrial-Alliance, which is expected to raise C$583 million when it launches its IPO in the first quarter of 2000. -- Sun Life of Canada, which is expected to raise $6.08 billion with its IPO in the first quarter of 2000. The improved access to capital will help the companies in the competitive Canadian market, Caldwell said. Great-West Lifeco., Clarica, Canada Life, Manulife and Industrial-Alliance are the top five companies, with 61% of the market. Caldwell noted that Manulife, Canada Life and Sun Life are more diverse geographically in their business, with 40% or less written in Canada. Clarica Life's Canadian business is about 80% of its book, while Industrial-Alliance relies on Canada to produce almost all of its business. He said companies that are diverse geographically are more likely to tap larger and faster-growing markets. Canada differs from the United States in that banks can own insurance companies but can't directly sell insurance, Caldwell noted. |
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The recent wave of demutualizations by Canadian life insurance companies will transform the financial services industry in Canada, said David Caldwell, managing director of CIBC World Markets.