- Another bank, this time the Bank of Queensland, is getting out of life insurance.
- BOQ is getting $65 million from selling its St Andrew’s Insurance business.
- The announcement was made as the bank posted a 4% rise in first half cash after tax earnings to $182 million.
The Bank of Queensland is selling its St Andrew’s Insurance business to Freedom Insurance Group for $65 million.
The deal includes an exclusive three-year distribution agreement with Freedom for the provision of life insurance to the bank’s customers.
The announcement was made as the bank posted a 4% rise in first half cash after tax earnings to $182 million. Statutory net profit after tax was up 8% to $174 million. Revenue was up 4% to $555 million.
The bank maintained a fully franked interim dividend of 38 cents a shares.
Jon Sutton, the Bank of Queensland’s Managing Director and Chief Executive Officer, says the St Andrew’s Insurance transaction makes 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,” he says.
“These changing conditions now mean St Andrew’s is a better long-term strategic fit for Freedom.”
The banking sector has been shedding insurance subsidiaries. In December, the ANZ Bank sold its insurance arm for $2.85 billion. In September, the Commonwealth announced it is selling its insurance businesses to the AIA Group for $3.8 billion.
Freedom is an ASX-listed listed insurance group specialising in developing, distributing and administering life insurance products in Australia.
Keith Cohen said, Freedom’s Managing Director and Chief Executive Officer, says St Andrew’s Insurance is a high-quality business.
“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,” he says.
The Bank of Queensland expects the deal to be completed in the second half of calendar year 2018.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.