Suncorp has reportedly hired investment bank UBS to advise it in a bid to purchase Commonwealth Bank’s $1 billion general insurance unit.
The $13.4 billion, Queensland-based bank and insurer is reportedly competing against Insurance Australia Group, which is working with Bank of America, to purchase the unit, according to a report by The Australian.
However, some think Suncorp is in a stronger position to buy the insurance unit, since IAG chief executive Nick Hawkins is a relative newcomer in the position and there is uncertainty surrounding the company’s liability position on COVID-19. One challenge IAG may face is gaining permission for the deal from the Australian Competition & Consumer Commission, since the company is the dominant player in the Australian general insurance market.
Read more: CBA in $886 million insurance sale
The CBA general insurance unit, CommInsure, has about 6% of the overall market share in the Australian insurance sector. Last year, CBA sold the life insurance operation of its CommInsure arm to AIA for $2.4 billion.
Last month, Westpac reached a deal to sell its general insurance arm to Allianz for around $725 million, The Australian reported.
This isn’t the first time Suncorp has turned to UBS when considering acquisitions. It also sought the investment bank’s advice when it considered a potential spin-off of its banking arm.