CBA to sell off general insurance business CommInsure

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Commonwealth Bank has announced it has found a suitor to buy its general insurance business CommInsure.

In a statement lodged to the sharemarket on Monday, the nation’s largest retail bank unveiled it has agreed to sell CommInsure to the Hollard group upfront for $625 million.

The sale also established a 15-year strategic deal where Hollard home and motor vehicle insurance products will be available through the bank to CBA customers.

CBA’s decision to offload its insurance business is part of the major bank’s simplification strategy which has already seen it sell off half its wealth business Colonial First State.

“The transaction is consistent with CBA’s strategy to deliver differentiated customer propositions and the best integrated digital experiences,” CBA chief executive Matt Comyn said.

“CBA and Hollard will co-invest in innovative, market-leading products and services that anticipate and meet the changing needs of our customers.”

The transaction is set to increase CBA’s common equity tier one (CET1) capital by $400m and is expected to increase its CET1 ratio by nine basis points.

CBA estimates the deal will result in a post-tax gain of $90m.

Completion of the deal is expected to occur by the middle of next year and is subject to approval by the Australian Prudential Regulation Authority.

CBA head of retail banking Angus Sullivan said the proposed deal will create a better experience for customers.

“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.”

Hollard is an international general insurance company and has over 1.2 million customers.

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