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Bank of Queensland sells insurance arm

Bank of Queensland has announced the sale of its St Andrews Insurance business for $65 million to Freedom Insurance Group.

The Queensland-based bank announced in a statement that there were two components to the sale: the first, a “$35 million quota reinsurance arrangement between the life insurance subsidiary of St Andrew’s and a major global reinsurer,” with the remaining $30 million paid by Freedom for the acquisition of St Andrew’s share capital.

BOQ will also enter into a three-year distribution arrangement (with an option of two additional years) with Freedom in order to provide life insurance products to BOQ’s clients.

The sale is expected to reach completion mid-2018 and provide a post-tax gain of $8 million, and raise BOQ’s Common Equity Tier ratio by 0.2 per cent.

Commenting on the transaction, BOQ managing director and chief executive Jon Sutton said: “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.”

Freedom managing director and chief executive Keith Cohen added that St Andrew’s Insurance complemented Freedom’s growth strategy.

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“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,” Mr Cohen said.

Both the reinsurance transaction and the share purchase are pending regulatory approval.