Aviva’s acquisition of Optiom bolsters its specialty lines and distribution in the Canadian insurance market. Credit: JHVEPhoto/Shutterstock.com.

Aviva’s Canadian division has concluded the acquisition of vehicle replacement insurance provider Optiom for £100m ($127.17m).

The deal bolsters the presence of Aviva in the Canadian market, particularly in the specialty lines segment. It is also claimed to enhance the company’s distribution abilities.

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Aviva announced the acquisition of Optiom from Novacap as well as various other minority shareholders on 27 November last year.

Optiom, known for its flexible payment options, is a key provider of vehicle replacement insurance in Canada, operating as a managing general agent (MGA).

The deal is said to be a significant addition to capital-light businesses of Aviva, which already constitute over half of its portfolio.

It promises to expand Aviva Canada’s footprint in a lucrative niche of the Canadian insurance sector.

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As an underwriting capacity provider for Optiom, Aviva Canada sees this as an opportunity to deepen its involvement in an appealing business line and to secure a reliable and growing source of distribution income.

Optiom’s strong distribution network is also expected to enable Aviva Canada to reach more customers.

Based in Calgary, Optiom was established in 2008 and has 100 employees. It is licensed across all territories and provinces except Quebec.

The company has to date sold more than 600,000 policies through its network, comprising more than 900 broker offices and 330 dealers.

Meanwhile, last month, Aviva announced it expects to secure a further £80m in proceeds from the sale of its shares in Singapore Life Holdings (Singlife).

An agreement with Japan’s Sumitomo Life Insurance Company for Aviva’s 25.9% stake in Singlife, along with two debt instruments, was agreed upon in September, with a total expected return of £930m.

The transaction is slated for completion in the first quarter of this year.

Aviva is planning to allocate the divestiture proceeds towards reinvestment, rewarding shareholders, or exploring further mergers and acquisitions.