Lumley Life to merge with PrefSure following sale
Capital Alliance Holdings Australia (CAHA) confirmed its $83.75 million acquisition ofLumley Lifeyesterday after having signalled its intent to purchase the group in late September.
CAHA, which is a subsidiary of South Africa-based life insurer Capital Alliance Holdings, aims to significantly increase its presence in the Australian market through the acquisition.
The move also paves the way for Wesfarmers to complete its acquisition of Edward Lumley Holdings operations in Australia and New Zealand, which commenced back in June but had been hindered by the sale of Lumley Life.
At the time Wesfarmers indicated it was not interested in taking on Lumley Life, as it was “more interested in the short-tail businesses [general insurance] rather than the longer-tail business [life], which involves taking on a greater level of liability”.
Capital Alliance plans to merge the Lumley Life business with its other Australian life business, CAHA subsidiaryPrefSure Life, in a bid to “yield cost reductions, create increased profit and embed value”.
CAHA will fund the acquisition via a $56 million rights issue, $9 million sourced from its parent and the balance of around $20 million from its internal cash resources.
This funding will raise Capital Alliance’s interest in CAHA from 39 per cent to 67 per cent.
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