RBC Insurance has agreed to purchase the Canadian operation of Provident Life and Accident Insurance Co., boosting the company’s presence in the living benefits sector.

Provident Life and Accident is a wholly owned subsidiary of Chattanooga, Tenn.-based UnumProvident Corp. RBC Insurance is the insurance operation of Royal Bank of Canada.

Under the deal, RBC Insurance said it will assume UnumProvident’s Canadian policy liabilities and may invest up to $500 million to complete the transaction and support the business in the future.

UnumProvident’s Canadian insurance operation is based in Burlington, Ont. It focuses on underwriting, sales and service of individual and group income replacement products, known as living benefits. UnumProvident also has regional offices in Toronto, Montreal, Calgary and Vancouver.

Jim Westlake, chairman and CEO, RBC Insurance, said in a statement the deal significantly expands the insurance companies presence in living benefits products, making it the leading provider of individual disability insurance, as well as giving it a boost in group long-term disability insurance.

All of UnumProvident’s roughly 620 employees will be offered employment with RBC Insurance as of the close of the deal, expected by March.

The deal is subject to approval by Canadian regulators. The acquisition is expected to be accretive to RBC’s earnings in the first year following completion of the transaction. As a result of the transaction, UnumProvident expects to release capital in excess of US$500 million, which will be used to improve its capital position.

UnumProvident president and CEO Thomas Watjen said its Canadian operation is the leading provider of individual income protection in Canada and has established a presence in the group benefits business.

Both UnumProvident and RBC Insurance said they expect the deal will be seamless to customers. “A clear focus will be placed on consistency of service and support, including meeting the special needs of group clients who have employees in both the U.S. and Canada,” the companies said.