Darin King defends forgivable $6.5 million loan to large insurance company

Since the provincial government announced a forgivable loan of $6.5-million to RSA Canada, a multi-national insurance company that plans on setting up business in St. John's, some have questioned if the company will be used as a call centre.

Business, Tourism, Culture and Rural Development Minister Darin King told CBC Radio's CrossTalk on Wednesday that a call centre is not part of the plan.

"There's going to be four areas they're going to focus on for the company. It'll be policy and service, advisory, information, there'll be digitization experts, claims professionals and finance operations for the company," he said.

On June 21, RSA, also known as Royal & Sun Alliance Insurance Co., and government held a news conference to announce its new partnership.

King said the company will headquarter some of its Canadian operations in St. John's and will establish 300 full-time jobs, resulting in about $70 million in new salary expenditures.

Opens another door of possibility

King said he's received positive feedback on the RSA Canada agreement.

"It's not oil and gas, it's not fishing, it's not forestry — it's another business area where there's a lot of highly-technical jobs and expertise," he said.

"And it opens up another door of possibility for us to continue to diversify the economy in that way. Those jobs, the average salary is going to be between $60,000 and $80,000 per year. A very good salary, very good company, and a very good opportunity for Newfoundlanders and Labradorians," he said.

King said employees will be housed in the existing Johnson Insurance building, and the hiring process has already started.

"They've started to recruit and they've been advertising online and through other means, and hoping to do interviews in the next short period of time. Their target is to have all of these positions in place over the next two years," he said.

King said the forgivable loan is coming from the province's Investment Attraction Fund, set up as a means for government to attract large-scale businesses to the province.

"We've been using it for a number of years now and there's a number of ways that we use it," he said.

"Sometimes there's a forgivable loan, sometimes there's low-interest bearing loans and other ways that we provide money. In this particular instance, we've established a mechanism where the money will be forgiven if they meet certain targets."

King said there are targets that RSA Canada must meet, as part of the forgivable loan agreement.

"So, without getting into private details with the company, I can say to you that there are targets set whereby when they hire a certain number of people and generate a certain amount of business, a certain amount of that loan will be forgiven," he said.

"They have to meet the targets over a five-year period, and as they meet those targets, the loan will be written off."

Stiff competition from other provinces

King said there were a number of other provinces competing for RSA's business. He added because the province was successful, there will be many benefits for government.

"The taxes that accrue to government, the spinoff benefits to the province with 300 more high-paying jobs in the province and and the potential for that to grow over the next five to seven years," he said.

"Obviously from the company's perspective, they were going to go where they felt they were getting the most generous offer, if you will, and the most support from the local government. In our case it was an opportunity to use the fund in the way we had intended to use it — to attract large-scale business to the province."

Johnson Insurance is part of the RSA Group. With 4,000 employees in Canada, the company is located in more than 140 countries worldwide.