Bank of Queensland Limited announced the sale of St Andrew’s Insurance (St Andrew’s) to Freedom Insurance Group Limited for total consideration to BOQ of $65 million.
The transaction is comprised of two components. The first is a ~$35 million quota reinsurance arrangement between the life insurance subsidiary of St Andrew’s and a major global reinsurer to be effective immediately before completion. The remaining cash proceeds of ~$30 million will be paid by Freedom as consideration for the acquisition of the share capital of St Andrew’s.
In addition, BOQ will enter into an exclusive three year distribution agreement (with an additional two year option) with Freedom for the provision of life insurance products to BOQ’s customers.
Freedom is a publicly listed insurance group that specialises in developing, distributing and administering life insurance products in Australia. The transaction will expand Freedom’s life insurance offering and strengthen its position in the Australian life insurance market.
BOQ Managing Director and Chief Executive Officer Jon Sutton said that the transaction made strategic sense for both parties.
“St Andrew’s has made a strong contribution to the BOQ Group since its acquisition in 2010, but industry and business dynamics have changed dramatically in recent years.
“These changing conditions now mean St Andrew’s is a better long-term strategic fit for Freedom” he said.
Freedom Managing Director and Chief Executive Officer, Keith Cohen said, “St Andrew’s Insurance is a high-quality business with great relationships and people that complement our business and augment our growth strategy. Freedom is looking forward to working with Bank of Queensland and continuing to protect its customers, supported by its position as one of Australia’s most respected banks with a widely-recognised service culture.”
The transaction is expected to result in an indicative post-tax gain on sale of ~$8 million and increase BOQ’s Common Equity Tier 1 ratio by ~20 basis points. St Andrew’s contributed $8 million to BOQ’s after tax profits in FY17.
BOQ expects completion to occur in the second half of calendar year 2018. The transaction remains subject to certain conditions, including regulatory approval of both the reinsurance transaction and the share purchase by Freedom.
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.