Wawanesa selling U.S. arm to California auto club
Wawanesa Mutual Insurance is on the road to selling its United States subsidiary to one of California’s largest auto insurers.
On Tuesday, the Winnipeg-based corporation announced its agreement to sell the Wawanesa General Insurance Company to the Automobile Club of Southern California, an affiliate of the American Automobile Association (AAA).
The deal must be approved in California, which could take nine months, said Evan Johnston, Wawanesa’s executive vice-president of strategy and related business. He wouldn’t disclose financial terms of the potential sale.
“We decided now is the right time to really focus on opportunities to grow in our home market of Canada,” Johnston said.
The corporation sees more than $4 billion in revenue annually. It undertook a review process of its operations last year, Johnston stated.
The findings prompted Wawanesa to concentrate on its Canadian operations and cease its services in the United States.
Wawanesa General generates about $550 million in annual revenue, Johnston said. It has around 300,000 members; most in California, some in Oregon.
“It’s a big company, but it’s relatively small in the context of our broader enterprise,” Johnston said.
Politics, inflation and climate change are factors in every market Wawanesa operates in. However, none led to the sale of Wawanesa General, Johnston stated.
Instead, the parent company will “redeploy” its resources in Canada. The private review found Wawanesa is under-represented in Ontario and Quebec. Its life insurance branch is undergoing a transformation, and it can invest more in technology to meet members’ needs, Johnston said.
“We see a lot of untapped potential,” he added.
Talks with the Automobile Club of Southern California began more than a year ago, Johnston said. He used the words “honest, humble and authentic” to describe the company, which is the largest member of the AAA federation of motor clubs.
The southern company offers insurance and roadside help, among other things. It’s “significantly larger” than Wawanesa, Johnston said.
The Automobile Club of Southern California did not accommodate an interview request but gave written quotes attributed to John Boyle, the president and CEO.
“The acquisition presents a unique opportunity for the Auto Club to acquire a longstanding California-based insurance company that shares the Auto Club’s member-centric culture and focus on superior member satisfaction,” the quote reads.
The Californian insurer has been in business since 1900. It will take Wawanesa General’s roughly 750 staff; there won’t be layoffs, Johnston said.
While the deal pends, the company will continue operations as Wawanesa General. The name won’t change immediately upon the deal’s acceptance, Johnston said, adding he’s confident the deal will be approved.
Wawanesa Mutual has more than 1.6 million Canadian members.
Gabrielle Piché
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Gabby is a big fan of people, writing and learning. She graduated from Red River College’s Creative Communications program in the spring of 2020.
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