Australia's CBA sells general insurance unit to South Africa's Hollard Group
- The deal comes just months after smaller peer Westpac sold its general insurance arm to German insurer Allianz for A$725 million.
Commonwealth Bank of Australia, the country's largest lender, said on Monday it would sell its Australian general insurance business to South Africa's biggest privately-owned insurer Hollard Group.
CommInsure General Insurance, which sells policies covering motor, travel, home contents and other insurance products, will be sold for an upfront cash consideration of A$625 million ($468.06 million), along with deferred payments.
The transaction is the latest in a series of sales of underperforming insurance assets by the country's Big Four banks, as lenders re-focus on local core operations, after a series of scandals ramped up regulatory scrutiny on the sector.
CBA's life insurance arm was slapped with rare criminal charges in 2019 for unsolicited sales calls, after it was sold to Hong Kong-based AIA Group in 2017.
The lender said it expected a post-tax gain of A$90 million, and an increase of about A$400 million of Common Equity Tier 1 capital from the sale. CBA also expects to get a pre-completion dividend.
CBA will continue to earn income on the distribution of home and motor insurance products through a new 15-year alliance with Hollard for the distribution of home and motor vehicle insurance products to CBA's retail customers in Australia, the lender said.
The deal comes just months after smaller peer Westpac sold its general insurance arm to German insurer Allianz for A$725 million.
The deal is expected to complete by mid-2022.
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