Sco­tia­bank T&T and Sagi­cor Fi­nan­cial Cor­po­ra­tion Ltd have can­celled their dis­tri­b­u­tion deal.

In a re­lease is­sued yes­ter­day Sco­tia­bank T&T said both com­pa­nies “have mu­tu­al­ly agreed” to not pro­ceed with the 20-year dis­tri­b­u­tion agree­ment for in­sur­ance prod­ucts and so­lu­tions in T&T.

Sagi­cor pro­vides fi­nan­cial ser­vices in the Caribbean as well as life in­sur­ance in the Unit­ed States

The sale of Sco­tiaL­ife T&T Ltd would there­fore not pro­ceed.

Sco­tia­bank T&T said it re­mained com­mit­ted to pro­vid­ing high qual­i­ty in­sur­ance so­lu­tions to its cus­tomers through Sco­tiaL­ife T&T Ltd, adding that this will be sup­port­ed by on­go­ing in­vest­ments in in­sur­ance sys­tems, new prod­ucts and dig­i­tal so­lu­tions to help its cus­tomers with all their pro­tec­tion needs.

The can­cel­la­tion fol­lows a de­ci­sion made in No­vem­ber 2019 by Sagi­cor to call off its deal to buy Sco­tia Ja­maica Life In­sur­ance Co Ltd fol­low­ing a sim­i­lar de­ci­sion re­gard­ing a dis­tri­b­u­tion agree­ment.

Ac­cord­ing to pre­vi­ous mar­ket fil­ings, Sagi­cor planned to pur­chase Sco­tia­bank’s in­sur­ance as­sets in Ja­maica and Trinidad as one in a se­ries of moves aimed at grow­ing fu­ture earn­ings of the com­pa­ny by 50 per cent over the short term.

Align­vest Ac­qui­si­tion II Cor­po­ra­tion, which owns Sagi­cor al­so in­di­cat­ed at the time in those fil­ings in Cana­da that oth­er ac­qui­si­tions were po­ten­tial­ly in the mak­ing.

The Cana­di­an spe­cial pur­pose ac­qui­si­tion com­pa­ny pre­vi­ous­ly in­di­cat­ed that it planned to spend US$240 mil­lion to ac­quire the Sco­tia in­sur­ance port­fo­lio: split US$144 mil­lion for Sco­tia Ja­maica Life In­sur­ance Com­pa­ny, and US$96 mil­lion for Sco­tia Life T&T.

Align­vest and Sagi­cor al­so ex­pect­ed that the ac­qui­si­tion and part­ner­ship agree­ment would have con­tributed an­nu­al run-rate net in­come of ap­prox­i­mate­ly US$30 mil­lion fol­low­ing its an­tic­i­pat­ed clos­ing in 2020.

In its fill­ings, Align­vest and Sagi­cor al­so ex­pect­ed both trans­ac­tions to close in Q4 of 2019, but sub­se­quent­ly amend­ed the ex­pec­ta­tions to re­flect the ac­qui­si­tion of Sco­tia Ja­maica Life In­sur­ance to close in the sec­ond half of 2019 and the com­ple­tion of the pur­chase of Sco­tiaL­ife T&T wrap up in the first half of 2020.

The pur­pose of the in­vest­ment, ac­cord­ing to Align­vest, would have been for Sagi­cor to pro­vide in­sur­ance prod­ucts to Sco­tia­bank’s cus­tomers, where Sagi­cor would be able to lever­age the part­ner­ship to cross-sell more of its prod­ucts.

Align­vest not­ed that the trans­ac­tion would bring sig­nif­i­cant op­por­tu­ni­ty for Sagi­cor to fur­ther en­hance its pen­e­tra­tion in the Ja­maica and T&T mar­kets.

As a re­sult of the part­ner­ship with Sco­tia­bank, Sagi­cor ex­pect­ed to in­crease its rev­enue growth by 14 per cent in 2020 for the Sco­tia Ja­maica Life In­sur­ance and Sco­tiaL­ife T&T ac­qui­si­tions as new prod­uct pen­e­tra­tion of the cus­tomer bases in­crease.