CHATTANOOGA, Tenn. – UnumProvident Corp. is selling its Canadian operations to RBC Insurance in the largest deal of its kind for the Chattanooga-based insurance giant since the 1999 merger that created it.

RBC will assume UnumProvident’s Canadian policy liabilities and has agreed to pay up to $382 million to finish the deal, both companies said Tuesday. The transaction is expected to be completed by March.

The deal releases more than $500 million in capital for UnumProvident, company officials said. The disability insurer plans to use the money to improve its capital position.

UnumProvident’s operations in Canada accounted for about 5 percent of its 2002 revenues of $9.9 billion, company officials said.

About 620 of UnumProvident’s 13,000 employees will be affected. All will be offered a job with RBC Insurance, officials said.

The insurer said no jobs among its 3,400 employees in Maine or 3,000 employees in Chattanooga are expected to be affected.

The sale was anticipated by some analysts, giving UnumProvident a way to restore rating agency and investor confidence in its balance sheet. The sale of UnumProvident’s Columbia, S.C.-based Colonial Life & Accident Insurance subsidiary also has been anticipated.

UnumProvident raised $1.1 billion through the sale of securities earlier this year.