Clarica Life
Sun Life Financial acquired Clarica Life Insurance through a winning bid for the company. As a result, Clarica merged with Sun Life under Sun Life Assurance Co. and now operates as one entity.
Summary
•Clarica Life & Sun Life Financial: Both insurance companies that provide health insurance as well as investment services such as health care and retirement saving plans.
•Both were large companies that were in the top ten insurance companies in Canada even before the merge took place.
Clarica & Sun Life
•Merger between the two officially occurred on December 31,2002
•Stakeholders involved: employees & directors from either company, stockholders, customers (those that use the companies’ services)
•Lack of government involvement (no mentioning of the government in any articles on the merge)
•Result: Sun Life becomes the largest insurance company in Canada with 21.6% of the insurance market. (The other top 9 insurance companies make up the rest of the percentages)
Why merge?
•Sun Life Financial will become the no.1 group life and health insurer
•“It will create one of the largest publicly traded North America life insurance companies in terms of market capitalization” (quote by Sun Life)
•Combined efforts from both sides (better customer service, skills & intelligence)
•Strength against competitors, contribution to funds
•Lower cost structure, and overall expenses
Reasons for not merging
•Criticized for large break-fee ($310 million) which discourages competing bids for Clarica Life-[ A break fee is a fee that Clarica would have to pay if it walked away from the merger]
•All insurance obligations and debts of Clarica Life now fall under Sun Life.
•Influence on the market results in less insurance companies to choose from
•1,650 jobs will be eliminated when acquisition is complete
The two companies officially merged on Dec 31, 2002. Sun Life Financial is still one of the top three insurance companies in Canada and is staying strong. The merge was smooth and no problems occurred afterwards. Overall, the merge seemed to be a good thing for both sides due to a lot of profit gained after the merge.