Continuing a push into the U.S. financial services market, Royal Bank of Canada said Monday that it has a deal to buy Liberty Life Insurance Co. and Liberty Insurance Services Corp. for $650 million in cash and up to $70 million in dividends.

Royal Bank, of Toronto, is already an insurance power in Canada, where bank ownership of insurance companies has been legal since 1993 - seven years ahead of the United States. In acquiring the two units of Liberty Corp. of Greenvale, S.C., it would add operations that had $435 million of revenue between them last year.

"We expect consolidation in the U.S., and since lots of banks have not focused on acquisitions of insurance companies, we looked at this as an opportunity to get in on this early," said Jim Westlake, president and chief executive officer of RBC Insurance in Toronto.

Royal Bank chairman and CEO John Cleghorn said the acquisitions were "steps toward building a larger presence for Royal bank in the U.S."

The companies would not say when the deal is expected to close.

Royal, which bought the Internet bank Security First Network Bank in 1998 and the mortgage lender Prism Financial of Chicago last year, is expected to use them to sell Liberty's policies.

Though Royal has experience as an insurer, cross selling is a different matter: It is illegal to cross-sell banking and insurance products in Canada.

James Overholt, senior consultant and manager of financial services for Milliman & Robertson in Chicago, said offering insurance at its Internet bank helps round out Royal Bank's financial services menu.

He said the acquisition would be a good fit with Prism Financial, which originated $8 billion of loans in 1999. Royal Bank completed the Prism acquisition in April for approximately $115 million in stock.

"One of Liberty's claims to fame is the ability to sell through mortgage services," Mr. Overholt said.

Still, Mr. Overholt was not sure Royal Bank's Internet presence would give it strong visibility in the United States.

"The big question is whether or not insurance sales on the Internet will succeed, and so far it's been a slow start," he said. "The jury is way out on this one. I believe that to succeed as a full-blown U.S. financial services company, you have to have some brick-and-mortar, and so far they haven't done much to build brick-and-mortar."

Mr. Overholt added that Royal Bank could use Liberty's agent offices. "It at least gives them a location for people to walk in," he said.

Mr. Westlake would not discuss possible cross-selling opportunities.

Liberty policies would continue to be sold through more than 1,000 community banks, larger banks, and credit card companies. "There is no reason for us to change any of that," Mr. Westlake said.

Royal Bank has $191 billion of assets, 49,000 employees, and 10 million customers in 30 countries. Its insurance operation has $682 million in premiums and is the top creditor insurer and travel insurer in Canada. It is also Canada's fourth-largest new individual life insurance company, and it launched a home and auto insurance division last year.

Liberty Life offers products through 625 agents, direct mail, and telemarketing. Liberty Insurance Services is a third-party administrator, providing underwriting, billing and collecting, claims processing, and investment management services.

Along with Security First and Prism Financial, Royal Bank owns Bull & Bear Securities, a New York investment firm it bought in March 1999 for $6 million.

Security First has been named the best Internet bank by Gomez Advisors for the last six quarters. The bank, founded in 1995 and purchased by Royal Bank in September 1998 for $20 million, offers savings, checking and credit card accounts and has a 24-hour service switchboard.

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