Insurance cast offs for BOQ

In a rare instance of Commonwealth Bank letting a customer list pass to a competitor, Bank of Queensland will buy the general insurance and life insurance operations of St Andrews.

CBA became owner of St Andrews, along with the rest of BankWest, in late 2008.

The larger bank will hang on to the investment management products sold by St Andrews, mainly through the life company. So it is genuine insurance products that BOQ is buying.

BOQ is already a distribution partner for St Andrews.

The financial record of the businesses BOQ is buying is cloudy.

BOQ, in a statement to the ASX on Friday, said the gross written premium of the two insurance businesses is $75 million. (BOQ also mentioned 165,000 policy holders, the second of only two metrics in the announcement made on Friday by the bank.)

APRA and ASIC data show much lower premium income than that stated by BOQ.

The financial statements of St Andrew's Insurance (Australia) Pty, for the 18 months to June 2009, show premium revenue of only $19 million and an underwriting profit of $11 million. Assets are said to be $33 million.

A business that primarily markets credit insurance to the personal market, the directors of the insurer noted in their annual report that "performance was suppressed by an increase in the number of unemployment claims across Australia."

The APRA General Insurance Bulletin shows gross written premium of $27 million in the year to June 2009, claims of $4 million and an underwriting profit of $16 million. There's also a loss classed as "other items" of $11 million. The net profit was $8.2 million in the APRA record.

St Andrew's Life Insurance Pty, for the short period of the six months to June 2009 earned a net profit of $4.6 million, compared with $11.6 million in the year to December 2008. Some of these revenues and profits CBA will be holding back for itself.