In June, Commonwealth Bank of Australia (CBA) agreed to sell its general insurance business to the Hollard Group for an upfront payment of $625 million. The sale of CommInsure General Insurance was both the biggest and the final major deal by one of Australia’s big four banks to divest general insurance businesses.
Richard Enthoven (pictured), Hollard’s founder and managing director of Hollard Holdings Australia, said right now he’s more excited by the other ingredient in his acquisition: the agreement with CBA to establish an exclusive 15-year strategic alliance for the distribution of home and motor vehicle insurance products to CBA’s retail customers.
“We going to work very closely with CBA to provide a really compelling home insurance offering that is deeply integrated into their mortgage offering,” he said. “Given how significant that offering is we think the prospects for significant take-up in the insurance product is high. That’s our thesis and we’re going to be working very closely with the retail bank at CBA to make that happen.”
CommInsure General Insurance already has over 800,000 policyholders according to the CBA media release announcing the sale.
Enthoven is pleased with the acquisition process so far.
“We’re very happy, and of the banks’ general insurance businesses, CBA’s was the largest and the best by a country mile so we feel like we’ve bought the best asset in the category and we also think if you’re going to partner with any of the big four banks going forward CBA is the largest, has the best digital capability, is the most customer focused and has the best prospects for growth,” he said.
Subject to regulatory approvals, Enthoven said the transaction will complete from July 01, 2022. One current task is working out a separation and integration workstream between the two companies.
“It involves unplumbing Commonwealth Insurance Limited from the CBA infrastructure and replumbing it into the Hollard infrastructure and just, very simply, policy systems need to feed into general ledgers and the policy system at CIL fed into the CBA general ledger and going forward it needs to feed into the Hollard general ledger,” said Enthoven.
He described his company’s CBA acquisition and Allianz Australia’s completion of its general insurance acquisition from Westpac Banking Corporation as, “the only two acquisitions of any kind of material scale for quite some time. So, these things don’t come up very often.”
However, he pointed out that, until their CBA acquisition, Hollard’s growth has always been organic and not through mergers or acquisitions.
“We just felt this was a great company, it was a one-off opportunity to partner with CBA which we felt was just too good to pass up,” he said.
Hollard has also experienced recent board shuffles and executive shake-ups. In July, Enthoven officially passed the Hollard Insurance CEO role to personal lines CEO Paul Fahey.
“What I wanted to achieve was for me to have the time to really think about big leapers, the things that make a real difference to our customers and our people and allow Paul to run the business,” said Enthoven.
“So, it was about playing Paul and I to our strengths, giving me more time to think and allowing Paul to execute on the company’s plans for the next few years and Paul is exceptional at that.”
On September 23, Hollard’s long serving board chair, Duncan West, will leave to take up a job with Suncorp Group as a non-executive director. West has been a non-executive director of the Hollard Group for eight years and the chair of the board for the past six years.
Read more: Hollard bids farewell to board chair
“I would suggest our business is something like five times the size it was when he started,” said Enthoven.
He added that West’s exit is the end of an era.
“Interacting with him as I have for the last two decades has been one of the highlights of my career, such a genuinely good, decent person with enormous sector experience,” said Enthoven.