By Alice Uribe
SYDNEY–Commonwealth Bank of Australia has agreed to sell its Australian general insurance business to the Hollard Group, with the two companies also striking an exclusive 15-year product distribution agreement.
Australia’s largest lender said it will receive 625 million Australian dollars (US$468.4 million) upfront from the sale of CommInsure General Insurance. In addition, there are several deferred payments if the business achieves certain goals.
The deal includes additional investment from Hollard throughout the 15-year alliance, which will see Hollard distribute home and motor vehicle insurance products to CBA’s retail customers in Australia. CBA will continue to earn income on the distribution of home and motor insurance products.
“CBA and Hollard will co-invest in innovative, market-leading products and services that anticipate and meet the changing needs of our customers,” said CBA Chief Executive Matt Comyn.
Upon completion, the transaction is expected to deliver an increase of approximately A$400 million of Common Equity Tier 1 capital, which CBA said would result in a proforma uplift to the Group’s CET1 ratio of approximately 9 basis points as at March 31.
The transaction is estimated to result in a post-tax gain on sale of approximately A$90 million, which includes estimated post-tax separation and transaction costs of approximately A$130 million. A pre-completion dividend is also expected by CBA.
Completion of the transaction is subject to regulatory approval and is currently expected to occur in mid-2022.
Australia’s Westpac Banking Corp. in December agreed 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 for the distribution of general insurance products to Westpac’s customers.
Write to Alice Uribe at [email protected]