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By Alice Uribe
SYDNEY–Commonwealth Bank of Australia has agreed to sell its Australian non-life insurance business to the Hollard Group, with the two companies also entering into an exclusive 15-year product distribution agreement.
Australia’s largest lender said it would receive A$625 million (US$468.4 million) in advance from the sale of CommInsure General Insurance. In addition, there are several deferred payments if the company achieves certain goals.
The deal includes an additional investment from Hollard over the 15-year alliance, under which Hollard will distribute home and motor insurance products to CBA’s retail customers in Australia. CBA continues to generate income from the distribution of home and auto insurance.
“CBA and Hollard will invest together in innovative, market-leading products and services that anticipate and meet the evolving needs of our customers,” said CBA Chief Executive Matt Comyn.
Upon completion, the transaction is expected to generate an increase of approximately A$400 million in Common Equity Tier 1 capital, which, according to CBA, would result in a pro forma increase in the Group’s CET1 ratio of approximately 9 basis points as of March 31.
The transaction is estimated to result in an after-tax gain on sale of approximately A$90 million, including estimated after-tax separation costs and transaction costs of approximately A$130 million. CBA also expects a pre-completion dividend.
Closing of the transaction is subject to regulatory approval and is expected to occur in mid-2022.
Australia’s Westpac Banking Corp. agreed in December to sell its Westpac General Insurance Ltd. and Westpac General Insurance Services Ltd. to Allianz for A$725 million.
The two companies entered into an exclusive 20-year agreement to distribute non-life insurance to Westpac’s customers.
Write to Alice Uribe at [email protected]
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