Echelon Financial Holdings (EFH) has entered into an agreement to sell its subsidiary, Echelon Insurance, to CAA Club Group.
The holdings company has agreed to sell the subsidiary (incorporated under the Insurance Companies Act), and the unregulated warranty business it held, to CAA for $175 million, payable in cash.
A release said that the agreement comes after EFH’s board of directors considered all other options. A committee appointed by the board and comprised of independent directors recommended that the sale of the insurance business “is in the best interest of the company.”
“We are excited about the sale of Echelon Insurance as it produces an attractive outcome to the shareholders of EFH and the continuation of employment for our staff,” commented EFH chairman of the board of directors Murray Wallace.
Wallace says the transaction is a culmination of Echelon Insurance’s development and business strategy.
“The success of this transaction can be directly attributed to the vision and commitment of the Echelon Insurance management team and staff who, in 2015, implemented a strategy to develop multiple personal and commercial insurance lines of business across the country,” he said. “We believe that CAA will enable Echelon Insurance to reach the next level of service for its brokers and customers.”
“The acquisition of Echelon Insurance represents an exciting opportunity to expand CAA Club Group’s insurance product offering into non-standard auto, property, and commercial insurance,” added CAA Club Group president and CEO Jay Woo.
“CAA is committed to the success of its independent insurance brokers and is excited to offer them new products to meet their customers’ needs. CAA looks forward to inviting Echelon Insurance’s brokers into one of Canada’s most trusted brands, and supporting them with industry-leading IT systems, support and infrastructure.”
Echelon’s sale of its insurance business comes after a rough year for the insurer. The company posted unsatisfactory results for Q4 2017, lost its CFO to competitor Foresters Financial, and even sold off its European operations.
