The Canassurance Hospital Service Association (Blue Cross Canassurance) and Blue Cross Life Insurance Company of Canada will enter into a Canada-wide alliance as of Jan. 2, 2020, announced the organizations.
Blue Cross Canassurance, headquartered in Montreal, will become a shareholder of Blue Cross Life, headquartered in Moncton.
"Blue Cross Canassurance is very pleased to join Blue Cross Life together with the other Blue Cross member plans. This alliance will contribute to strengthening the collaboration between the various Blue Cross plans across Canada, thus reinforcing our ability to provide excellent products and services to our customers and business partners," stated Sylvain Charbonneau, President and CEO of Blue Cross Canassurance.
Marie-Josée Martin, President and CEO of Blue Cross Life, says the alliance “marks an important step in achieving our strategy of operating on a truly national level; it strengthens our business while improving our capacity to work with the Blue Cross plans throughout Canada."
Commenting on the agreement, ratings agency AM Best announced on Dec. 6 that the credit ratings of Blue Cross Life remain unchanged following the alliance announcement.
AM Best observes that Canassurrance “will contribute capital to Blue Cross Life with the net effect of increasing risk-adjusted capitalization. Once the transaction is complete, Canassurance will own approximately a 14% stake in Blue Cross Life, and will transition its existing block of life and disability lines of business within the next two years.”
AM Best added that the deal will enable Blue Cross Life to expand its products for individual life and disability into the Ontario and Quebec markets. The ratings agency also noted that the organization can also expand in British Columbia through an alliance formed with Pacific Blue Cross earlier this year.
“While the alliance with Canassurance gives Blue Cross Life a truly national footprint, AM Best notes Blue Cross Life will continue to be a niche provider of life and disability benefits in Canada. The business model of Blue Cross Life remains unchanged as a manufacturer of life and accident and sickness insurance products, which are distributed by its owners,” added AM Best.
The alliance is subject to approval by regulatory authorities.