Westpac has unveiled the $725 million sale of its general insurance business to global insurer Allianz, marking another step following the bank’s strategic review of its specialist businesses.
As part of the deal, Westpac has signed an exclusive 20-year agreement to distribute a range of Allianz’s general insurance products including home and contents, expanding on an existing partnership since 2015 which has seen Westpac offer customers Allianz products such as auto, travel, boat and business insurance.
Westpac chief executive Peter King said the transaction was another step towards his goal to simplify the bank, while continuing to help customers with general insurance needs. The $725m sale price, a multiple of 1.3 times last financial year’s gross written premium for the business, is estimated to result in a small post-tax gain in the current financial year and add almost 12 basis points to Westpac’s common equity Tier 1 capital ratio.
“General insurance is important for many Australians and we are pleased to be entering a long-term partnership with a global insurance expert to continue to help our customers protect the things they value,” Mr King said.
The deal marks the second divestment following the recent sale of Westpac’s vendor finance business as part of a review of several businesses being led by Jason Yetton since he re-joined the bank in May as chief executive of the bank’s newly formed specialist businesses division, housing the Group’s superannuation, platforms, investments, insurance, auto finance and Westpac Pacific banking businesses.
At the time, Mr Yetton said the review would “consider all options” for the specialist businesses – each of which he said has strong market positions, long histories and deep customer relationships – and “whether ultimately they might be better served by being in external ownership to continue their investment path and deliver for customers”.
“We're making good progress and we continue to look for options for our remaining specialist businesses," Mr Yetton told Westpac Wire today.
The transaction is expected to be completed in the second half of 2021.