Westpac has sold its general insurance arm to Germany’s Allianz group.
The deal, announced on Wednesday, will see Allianz pay A$725 million for the business that currently manages around 550,000 policies generating gross written premium of $555 million.
The transaction is expected to take up to a year to complete, which means Westpac will not realise the capital release until the second half of 2021.
Westpac chief executive Peter King said the deal was a significant milestone in simplifying the bank’s business mix.
“This transaction is another step in simplifying our business while continuing to help customers with their general insurance needs,” he said.
“General insurance products are important for many Australians and we are pleased to be entering a long-term partnership with a global insurance expert to continue to help customers protect the things they value.”
Under the terms of the deal, the parties have agreed that Allianz will be the exclusive distributor of general insurance products to Westpac customers for the next 20 years.
Westpac is in line to receive contingent payments over the next five years subject to business performance over the next five years.
These undisclosed payments are in addition to the $725 million headline sale price.
The sale is not expected to result in a job cull, with some staff currently employed in the general insurance expected to be retained by Westpac and others to migrate to the Allianz operation.
“Allianz will welcome Westpac’s general insurance employees after the transaction has been finalised,” Allianz said in a statement.
“Allianz and Westpac will now go through a process of consulting with key stakeholders including employees and obtaining all relevant regulatory approvals.”
The general insurance arm is the third business offloaded by Westpac since it embarked on a program to focus on its core banking operation last year.
The bank also sold its proprietary financial advice business to Viridian last year and in August it offloaded a vendor finance arm to Angle Finance.