Australia’s biggest bank has announced it is selling its general insurance business, CommInsure General Insurance, to global insurance giant Hollard in a $625 million deal.
The agreement will create a “15-year strategic alliance” with Hollard to sell home and motor vehicle insurance to CBA’s customers, the bank said in a statement to the ASX on Monday morning.
Though Hollard will sell the insurance products, the big bank will keep earning profits, with CBA set to rake in $90 million in profit from the sale.
Commonwealth Bank's (ASX:CBA) stock price, which recently enjoyed all-time highs having pushed past the $100-a-share milestone, dived following the news, and was down nearly 5 per cent around noon.
The deal is still subject to regulatory approval, and is expected to happen in mid-2022.
“The transaction is consistent with CBA’s strategy to deliver differentiated customer propositions and the best integrated digital experiences,” said CBA chief Matt Comyn.
“CBA and Hollard will co-invest in innovative, market-leading products and services that anticipate and meet the changing needs of our customers.”
CommInsure General Insurance currently provides home and contents and motor vehicle insurance coverage to 800,000 Australians.
Hollard Holdings Australia managing director Richard Enthoven said the company felt a "genuine connection with CBA".
“We are extremely excited to welcome CommInsure’s people to the Hollard Family and see this opportunity as a deep privilege to work with them and CBA over the next 15 years to reinvent personal insurance products and services for all Australians," he said.
“This partnership will allow Hollard to co-invest with CBA to innovate and deliver market-leading experiences for CBA customers."
Yahoo Finance has reached out to CBA for further comment.
About Hollard Insurance
Hollard was established in 1999 in South Africa to underwrite self-insurance programs for major corporate clients and banks.
The company now has businesses across the world, including Australia, New Zealand, the UK, China, and more.
Other than home, contents and car insurance, Hollard also offers bicycle, pet, and business insurance.
Hollard has more than 1.2 customers and 800 staff in Australia.