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CBA sells general insurance business

CBA has sold its Australian general insurance business to South African insurer Hollard Group and entered a 15-year distribution deal.

The big four bank has entered into an agreement to sell CommInsure General Insurance, with the deal including a 15-year strategic alliance with Hollard for the distribution of home and motor vehicle insurance products to CBA’s retail customers.

CBA will also continue to earn income on the distribution of insurance products.

The transaction consideration includes $625 million over staggered payments and additional investment from Hollard during the 15-year alliance, with CBA calculating a post-tax gain on sale of around $90 million. The bank is also expecting a pre-completion dividend.

Matt Comyn, chief executive of CBA, commented the transaction is in line with the bank’s strategy to “deliver differentiated customer propositions” and to focus on the digital experience.

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Angus Sullivan, group executive for retail banking services, echoed Mr Comyn, commenting: “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.”

CBA is anticipating an increase of around $400 million in common equity tier 1 capital upon completion of the sale, which is expected to wrap mid-year 2022.

The sale has aligned with the bank’s simplification strategy post-royal commission, following the trend of major institutions exiting their businesses in wealth and insurance in favour of focusing on their core banking and lending divisions.

As such, NAB recently completed the sale of its investment and superannuation arm, MLC, to wealth giant IOOF, after 21 years in wealth management.

CBA also laid out its plans for increased digitisation for the coming years in May, when it launched an open banking pilot in its app and invested in two start-ups, online shopping tool Little Birdie and subscription-based electricity provider Amber.

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Data was highlighted as key, with the bank using customers’ transactional information to build automated tools, such as prompts to make payments or to use short-term loans.

[Related: NAB settles BBSW class action]

CBA sells general insurance business
CBA sells general insurance business
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Sarah Simpkins

Sarah Simpkins is the news editor across Mortgage Business and The Adviser. 

Previously, she reported on banking, financial services and wealth for InvestorDaily and ifa.

You can contact her on This email address is being protected from spambots. You need JavaScript enabled to view it..

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