Following months of speculation, it’s now been announced who gets to snap up the general insurance business of Commonwealth Bank of Australia (CBA), and it’s not one of the names previously tagged as part of the race.
In a release, CBA said it has agreed to sell its Australian general insurance business to the Hollard Group. Aside from the sale of CommInsure General Insurance, the two camps have also entered an exclusive 15-year distribution partnership involving home and motor insurance and CBA’s retail customers in Australia.
“We are incredibly excited by today’s announcement,” commented Hollard Holdings Australia managing director Richard Enthoven.
“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.”
Payment for the entire deal includes $625 million of upfront consideration, deferred payments that are payable upon achieving certain business milestones, as well as additional investment from Hollard throughout their “strategic alliance” over the next one and a half decades.
Additionally, CBA will continue to earn income on the distribution of home and motor insurance products, and a pre-completion dividend is also expected to be received by the bank. CBA said the latter’s amount is subject to the timing of completion, business performance, and regulatory approvals.
“The transaction is consistent with CBA’s strategy to deliver differentiated customer propositions and the best integrated digital experiences,” said chief executive Matt Comyn. “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 for retail banking services Angus Sullivan added: “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.”