Banking giant Commonwealth (ASX:CBA)
is set to offload its home and vehicle insurance division to South African-headquartered insurer Hollard Group.
The transaction entails an upfront cash consideration of $625 million and undisclosed milestone-based add-ons.
The demerger is in line with the big four bank’s strategy of reducing its presence in non-core areas such as wealth management, superannuation, financial advice and, life insurance.
The deal will also pave the way for further collaboration between Commonwealth and Hollard Group, as the two parties plan to engage in joint investment opportunities in the insurance space.
Hollard commented on the new alliance, “We have a shared vision for the future of home insurance, the potential for better customer outcomes, and an exciting role for digital innovation along our entire value chain,”
The strategic partnership promises to combine the big-four bank’s extensive customer reach and digital banking infrastructure with the Hollard’s innovative approaches to insurance technology.
Commonwealth has also committed to offering products from the insurance business under new management, to its comprehensive retail customer base for the next 15 years.
Shares in Commonwealth (ASX:CBA)
are trading 4.2 per cent lower at $99.29