The Australian banking group has also entered into a 20-year bancassurance agreement with Allianz for distributing the general insurance products
Australian financial services firm Westpac Group has signed a deal to sell its general insurance business to German insurance group Allianz for A$725m ($535m).
As part of the deal, the Australian company is divesting Westpac General Insurance and Westpac General Insurance Services.
The parties have also entered into an exclusive agreement for distributing the general insurance products of the two firms to Westpac’s customers for a period of 20 years.
The general insurance business to be divested currently caters to Westpac’s customers. It offers home and contents insurance and landlord insurance, which are issued by Westpac General Insurance.
Westpac General Insurance had close to 550,400 policies in force and A$555m ($409.58m) in gross written premium (GWP), as of 30 September 2020.
Westpac Group CEO Peter King said: “This transaction is another step in simplifying our business while continuing to help customers with their general insurance needs.
“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.”
The deal also includes contingent payments, which will be subject to integration milestones and performance of the acquired business in the next five years, along with ongoing payments as per the distribution agreement.
According to Westpac, the new distribution arrangement expands its existing partnership with Allianz. Since 2015, Westpac has distributed a variety of the German insurer’s products, which include auto, travel, caravan, trailer, boat, and business insurance.
The Australian banking group will continue to take responsibility for certain pre-completion matters, while giving protection to Allianz through a mix of provisions, warranties, and also indemnities.
For Allianz, the deal marks a key step in expanding its consumer insurance portfolio in Australia.
Allianz CEO Oliver Bäte said: “Westpac has been a long-term business partner for Allianz and we are very pleased to enter into this new agreement.
“Both companies share aligned values, particularly in relation to a customer-first approach to design and distribution, and using innovation and technology as key enablers to delivering customer satisfaction, so we see this as a fantastic opportunity.”
The deal, which is subject to receipt of multiple regulatory approvals, is expected to be closed in the latter half of next year.