And so it happened – following much media speculation, both Allianz and Westpac Banking Corporation confirmed on Wednesday the sale of the latter’s general insurance business for $725 million.
Peter King, chief executive of Westpac, views the transaction as a significant milestone in building what he called a “simpler, stronger” bank.
It’s no secret that the financial services giant has been conducting a detailed strategic review of its businesses where the group doesn’t have sufficient scale or where the returns are lacking in relation to risk.
“This transaction is another step in simplifying our business while continuing to help customers with their general insurance needs,” said King, whose camp also sealed an exclusive two-decade distribution deal with Allianz.
Read more: Allianz, Westpac seal general insurance deal
According to the German insurer – the Australian unit of which has been a Westpac partner since 2015 – it will be issuing and servicing a range of policies, including home and contents, under the lender’s brands as part of the new agreement. This is along with the existing products of motor, caravan and trailer, and travel insurance.
For mergers and acquisitions expert Michael Gajic, the transaction is a victory for both camps.
“The banks seem to be getting out of wealth management, insurance, etc., at quite a rate post-Royal Commission, so this is not a surprise and should be a win-win for both Allianz and Westpac,” the MinterEllison partner told Insurance Business.
“[It’s] interesting to see what happens to other Westpac lines in the future, such as their auto finance loan book.”
The Financial Sector Reform (Hayne Royal Commission Response) Bill 2020, which includes new anti-hawking [of financial products] provisions, was introduced into Parliament in November.