SGI Canada in talks about partial sale
Part of SGI Canada could be up for sale.
SGI president and CEO Andrew Cartmell said the Crown corporation has held conversations with 16 different companies.
“I’ve had phone conversations in the last couple of weeks,” he said. “There’s some interest in the industry just in terms of what SGI is looking for but quite honestly, nothing has progressed much beyond that yet.”
Bill 40, which was passed in April, allows for the sale of up to 49 per cent of Crown corporations.
“There’s a strong sense in our industry that in order to survive longer term, the idea of having partners who excel in certain areas where you don’t, that creates synergy,” Cartmell said.
SGI Canada netted $65 million in profit last year, paying a $43 million dividend to Crown Investments Corporation.
The company is also growing its business in Alberta, Manitoba, Ontario and British Columbia.
Any partnership would maintain a head office in the province and create new jobs, Joe Hargrave, Minister responsible for SGI, said.
“In the whole entire insurance industry over the last number of years, there’s been considerable consolidation, and sometimes it’s about strength in numbers,” Hargrave said. “We’re looking also to diversify, to spread risk.”
Carla Beck, SGI critic, worries selling part of the company would jeopardize future dividends.
“What’s the problem we’re trying to solve here? We’ve seen SGI achieve growth well above industry standards across the province. They’ve returned over $300 million in dividends to the people of Saskatchewan over the last decade,” Beck said.
Moving forward, SGI Canada anticipates climate change will produce more claims. Fire damage used to be the number one risk facing homeowners. It’s now water.
“We as a company and in our industry have seen the frequency and severity of storms increase dramatically over the last 20 or 30 years,” Cartmell said.
As a result, SGI Canada introduced water protection coverage in the fall of 2016. Three quarters of eligible customers have already signed up.
The other side of SGI’s business, the Saskatchewan Auto Fund, has a goal of breaking even. It’s safe from any sell-off under Bill 40.
According to the annual report, the Auto Fund had $798 million in claims in 2016-17 and earned more than $173 million through its investment portfolio.
Serious accident and injury claims have decreased over the last decade. Cartmell said stricter legislation, photo speed enforcement, ignition interlock programs and driving campaigns are all helping.Follow @Jules_Knox
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