Desjardins Group will purchase State Farm Canada's property and casualty and life insurance business, as well as its Canadian mutual fund, loan and living benefits companies, the companies announced Wednesday

The transaction is expected to close in January 2015, subject to approval from regulators and compliance with customary closing conditions, according to the $210 billion cooperative Desjardins Group in Lévis, Québec in Canada, and State Farm in Bloomington, Ill.

Following the closing, Desjardins will operate the newly acquired State Farm Canada businesses under the State Farm brand for an agreed license period, the companies said.

As part of the agreement, State Farm will make a $450 million investment in non-voting preferred shares into Desjardins' post-closing property and casualty insurance business, which will include the newly acquired State Farm Canada property and casualty operations.

In addition, Crédit Mutuel, a major European cooperative financial group and long-term partner of Desjardins, will invest $200 million. Desjardins will allocate capital of approximately $700 million to support the growth of its P&C business.

Desjardins Group's Life and Health Insurance subsidiary, Desjardins Financial Security, and certain other Desjardins units will allocate capital of $250 million for the life insurance, mutual fund, loan and living benefits components of the agreement.

As a result of the transaction, Desjardins will become the second largest P&C insurance provider in Canada with annual gross written premiums of approximately $3.9 billion, up from approximately $2 billion, according to Desjardins. The transaction also strengthens Desjardins position as the fourth largest life and health insurer in Canada, the company noted.

Once the transaction is finalized, State Farm's 1,700 Canadian employees and network of more than 500 Canadian agents will continue to serve over 1.2 million customers in Ontario, Alberta and New Brunswick.

Desjardins said it expects the transaction will lead to job creation in the coming years in Canada, including Québec. The company said it will also continue to operate its other insurance brands separately across the country.

Desjardins is the leading cooperative financial group in Canada and the fifth largest cooperative financial group in the world, the financial institution said.

State Farm and its affiliates are the largest provider of car insurance in the U.S. and is a leading insurer in Canada, the company said.  In addition to providing auto insurance quotes, their 18,000 agents and more than 65,000 employees serve 81 million policies and accounts – more than 79 million auto, home, life and health policies in the United States and Canada, and nearly two million bank accounts.