Home / Corporate / Hollard leaps ahead with CommInsure acquisition
21 June 2021
Hollard has entered into a deal to acquire Commonwealth Bank’s general insurance operation, expanding its business by around 50%, giving it a stronger position in personal lines and adding distribution.
The insurer will pay about $625 million upfront, plus further later amounts, for the Australian CommInsure business, which has gross written premium (GWP) of about $800 million, focusing on home and contents and motor.
As reported in a Breaking News bulletin earlier today, the transaction includes a 15-year deal with Hollard for the distribution of products to CBA retail customers in Australia, with the insurer expected to make additional investments “to drive innovation and enhance the customer experience”.
“This is a very significant deal for Hollard, not only because it will add circa 50% growth to our business, but also because it cements a 15-year partnership with Australia’s premier bank,” Hollard Holdings Australia MD Richard Enthoven told insuranceNEWS.com.au.
Completion of the transaction, subject to Australian Prudential Regulation Authority approval, is expected in the middle of next year.
Hollard is set to report GWP of around $1.6 billion this financial year and is achieving annual growth of about 15%, taking the likely total size of the combined businesses at the time of deal completion to around $2.6 billion.
Mr Enthoven says after its first year the combined business would likely have GWP of close to $3 billion, with the deal “very squarely” positioning Hollard as one of the big five insurers in Australia, and possibly in the top four for personal lines.
The insurer’s expertise and scale combined with CBA’s digital capabilities and customer-centric approach positions the combined business for growth, while the deal also introduces Hollard to the bank distribution channel.
“It gives us access to a segment of the market we currently don’t have access to, and for Hollard we think that is enormously exciting,” he says.
Hollard CEO Paul Fahey says welcoming CommInsure staff will be a key consideration in completing the transaction.
“What is really important for us is how they become part of the Hollard family,” he said. “The cultural alignment on people and customer is right at the top of things we have focused on with CBA, and will continue to focus on in coming years.”
Hollard serves more than 1.2 million customers, has 800 employees and offers products including motor, home, contents, pet and commercial insurance.
The deal includes a pre-completion dividend to be received by CBA, with the amount subject to the timing of completion, business performance and regulatory approvals. Mr Enthoven declined to comment on reports that the total value of the deal is around $1 billion.
CBA Group Executive Retail Banking services Angus Sullivan says the long-term strategic alliance will bring together the “number one mobile banking app and Australia’s largest branch network with Hollard’s innovative insurance products and enhanced claims technology” to deliver excellent customer experiences.