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The Commonwealth Bank (CBA) has sold the two insurance divisions of Perth-based St Andrew’s to Bank of Queensland (BOQ).
The transaction is understood to have followed an approach to CBA by BOQ, but did not include the group’s superannuation, investments, retirement income and financial planning business, which will be integrated into CBA’s wealth management business.
It is expected that the sale, which remains subject to regulatory approval and was agreed to at an undisclosed price, will be completed by July 2010.
CBA acquired St Andrew’s as part of its purchase of Bankwest in 2008. But because the bank already boasted a large insurance business through its retail operations and Colonial First State, selling the insurance division of St Andrew’s made sense, according to Commonwealth Bank wealth management executive Grahame Petersen.
“St Andrew’s insurance largely replicates an existing insurance capability within CommInsure, and the sale avoids the complexities and costs of integrating the two insurance businesses,” Petersen said.
BOQ chief executive David Liddy described the purchase as a “bolt on acquisition”, and said the bank (which was already a significant customer of St Andrew’s insurance products) would distribute the consumer credit insurance and life insurance products of St Andrew’s directly and through third party financial intermediaries.
“The acquisition of the St Andrew’s business fits within the BOQ growth strategy including income diversification through businesses with complementary products to our core mortgage distribution,” Liddy said.
“This is a true bolt-on acquisition, in keeping with our strategy — and the capital requirements are within our existing footprint,” Liddy added.
St Andrew’s insurance products cover about 165,000 policyholders and boasts gross written premiums of $75 million annually.
Liddy said, based on current performance, the purchase would add immediately to BOQ’s earnings per share but would have no material impact on 2010 earnings.
BOQ shares closed 2c higher at $11.77 on Friday following the announcement, while CBA shares were up 11c to $57.37
