Suncorp Group is selling its 50% joint venture interest in RACT Insurance Pty Ltd (RACTI) for $83.75 million in cash.
The move, according to Suncorp, is in line with the group’s continued portfolio simplification. RACTI, which operates as an independent entity, is a 50:50 JV between Suncorp and the Royal Automobile Club of Tasmania Ltd (RACT) for the provision of home and motor insurance in the state.
“Suncorp and RACT have enjoyed a successful relationship in Tasmania since 2007,” noted Suncorp chief executive Steve Johnston. “We have mutually agreed that now is the right time for RACT to take full control of the insurance entity.
“This is consistent with our focus on simplifying the group and driving improvement in our core insurance and banking businesses.”
Johnston added that the transaction – the completion of which is expected to take place late in the 2021 calendar year – is in the best interests of customers, shareholders, and the business.
The CEO went on to state: “Tasmania remains an important market for Suncorp Group. We are now focussed on driving growth in the region through our wholly owned brands. This includes our leading national mass market brand AAMI, as well as our more specialised brands Shannons and APIA.”
RACTI, as of March 31, underwrote about $112.5 million of home and motor gross written premium. Suncorp said the pre-tax profit on sale is likely to be in the range of $65 million to $70 million.