Scotiabank Independence Square.

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.