Royal Bank of Canada has opened the first of 100 retail insurance offices planned for Canada to augment a business line that produces more than $3 billion of annual revenues in 30 countries.
The office, opened in late June next door to an RBC branch in Scarborough, Ontario, enables the banking company to comply with a prohibition in Canadian law on banks' selling most kinds of insurance in their branches.
Neil Skelding, the president and chief executive officer of RBC Insurance, said the office, to his knowledge, is the first of its kind. RBC's insurance products have been sold by telephone and through independent brokers, travel agents, a proprietary sales force, and the Internet.
"We certainly wanted to take advantage of our strong retail presence in Canada," he said, noting that all the insurance offices will be sited near bank branches.
The company does not focus, as many U.S. banks do, on selling commercial insurance. One reason is that it underwrites its life insurance products, Mr. Skelding said, and personal lines are simpler to underwrite than commercial ones.
Acquisitions and organic growth have enabled RBC Insurance to post a compound annual growth rate of about 30% a year from 1995 through 2004, he said.
RBC Insurance plans to open four more insurance offices this year in Ontario and Quebec. Twenty-five more are "on the drawing board," Mr. Skelding said.
People can meet with insurance advisers in the new office to discuss homeowners, auto, travelers, and term life products, as well as simplified health insurance.
RBC offers insurance in the United States through its broker-dealer, Minneapolis-based RBC Dain Rauscher Corp., and independent broker-dealers, as well as its RBC Liberty Insurance subsidiary. Liberty, based in Greenville, S.C., has more than $2 billion of assets and nearly $19 billion of insurance in force.
The Canadian bank's RBC Centura unit in Rocky Mount, N.C., also offers insurance; the business had nearly $3 million of fee income from insurance sales last year, according to Michael White Associates' Fee Income Ratings Report. This placed it 53rd out of the 64 bank holding companies with more than $10 billion of assets that reported insurance revenue. Insurance fee income amounted to less than 2% of the bank's noninterest income.
RBC has 3,500 employees worldwide and does business in 30 countries. Operations in the United States, which employ 250 people, account for just under one-third of the $3 billion of annual revenues, a number that includes revenue from annuity sales.
