Wave of consolidation continues: Maritime Life to acquire Liberty Health

(March 13, 2003) Maritime Life continues to snap up its former rivals with today’s announcement that it plans to purchase Toronto health insurance firm Liberty Health for $140 million. The Halifax-based insurer says the acquisition will add approximately $700 million worth of premiums, mostly to its group insurance operations.

Maritime Life is a subsidiary of Boston-based John Hancock Financial Services. Liberty Health, with 500 employees, handles group life, disability and individual health insurance.

“Liberty Health is our fourth acquisition in the past eight years and a good complement to our expanding business,” said Maritime Life vice-president Bob Nicholas in a statement. “This significantly increases our presence in the group insurance arena, especially in Ontario, our largest market,” Nicholas said.

In 1995, Maritime took over the life insurance business of Confederation Life. That was followed by the purchase of Aetna Life Canada in 1999 and the acquisition of Royal & Sun Alliance Financial in 2001.

Thomas Ramey, president of Liberty International, Liberty Health’s parent company, says the recent wave of consolidation in Canada’s insurance industry meant that his company would either have to acquire another firm, or sell to remain competitive.

“We decided to sell Liberty Health to Maritime Life — an excellent company — after giving much consideration to what is in the best interest of Liberty International, Liberty Health, its customers and employees,” Ramey said.

The deal is expected to close in July, pending regulatory approval.

There’s been no shortage of recent consolidation activity in the insurance sector. Last month, Great-West Life announced a friendly takeover bid for Canada Life worth $7.3 billion, trumping an earlier unsolicited offer from Manulife. And last year Sun Life closed its $7 billion deal for Clarica.

Some advisors worry about the consolidation trend. Lawrence Geller, who’s been in the insurance business for more than 25 years, says bigger isn’t necessarily better. Larger companies are more expensive to deal with, he says.

“There are more errors in policies, more errors in quotes and more errors in everything,” Geller said in the February edition of Advisor’s Edge magazine. “It takes a long time for systems to meld.”

What does this latest wave of consolidation mean to you and your industry? Share your thoughts in the “Free for All” forum of the Talvest Town Hall on Advisor.ca.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca