Commonwealth Bank of Australia (CBA) has entered into an agreement to sell its Australian general insurance business (CommInsure General Insurance) to the Hollard Group (Hollard).
The transaction includes $625 million of upfront consideration, together with deferred payments and additional investment from Hollard.
CBA will also continue to earn income on the distribution of home and motor insurance products.
A pre-completion dividend is also expected to be received by CBA, with the amount subject to the timing of completion, business performance and regulatory approvals.
The overall transaction is expected to deliver an increase of approximately $400m of Common Equity Tier 1 (CET1) capital, resulting in a pro forma uplift to the Group’s CET1 ratio of approximately 9 basis points, on an Australian Prudential Regulation Authority basis.
It is estimated to result in a post-tax gain on sale of approximately $90m, which includes estimated post-tax separation and transaction costs of approximately $130m.
The transaction remains subject to APRA approval and is currently expected to occur mid 2022.
Chief Executive Officer, Matt Comyn, commented: “The transaction is consistent with CBA’s strategy to deliver differentiated customer propositions and the best integrated digital experiences.
“CBA and Hollard will co-invest in innovative, market-leading products and services that anticipate and meet the changing needs of our customers.”
Group Executive Retail Banking Services, Angus Sullivan, said: “This long-term strategic alliance will bring together CBA’s number one mobile banking app and Australia’s largest branch network with Hollard’s innovative insurance products and enhanced claims technology, to deliver excellent experiences for our customers.”
Managing Director for Hollard Holdings Australia, Richard Enthoven, added: “We are incredibly excited by today’s announcement. The synergies between CBA and Hollard extend well beyond strategy and market segmentation.
“We have a shared vision for the future of home insurance, the potential for better customer outcomes, and an exciting role for digital innovation along our entire value chain.”
