Four in race for CBA’s general insurance business

Four parties are understood to be shortlisted for CBA’s general insurance business and final bids due in the next month. Picture: NCA NewsWire/Bianca De Marchi

The competition for CBA’s $1bn general insurance business is approaching the pointy end, with four parties understood to be shortlisted and final bids due in the next month.

IAG, advised by Bank of America, and UBS-advised Suncorp are vying for the division and are considered the favourites to win.

However, it is now believed that Japan’s Tokio Marine has made it through to the second stage of the contest and is taking advice from Macquarie Capital.

The identity of the fourth shortlisted party remains a little less certain, although most point to QBE as the most likely candidate.

Tokio Marine is part of The Mitsubishi Group and operates in 38 countries.

It is Japan’s largest property and casualty insurance group in terms of revenue and offers a variety of insurance products.

Goldman Sachs is running the contest on behalf of CBA.

One significant area of doubt for Suncorp and IAG is whether they will face any opposition from the Australian Competition & Consumer Commission.

IAG is the dominant player in the Australian general insurance market across all lines of insurance. It continues to trade under the NRMA Insurance brand in the domestic market.

IAG has a 21.7 per cent market share, behind Suncorp with 12.4 per cent, Allianz with 7.8 per cent and QBE with 7.3 per cent, according to IBIS World.

The sale is drawing to a conclusion as Westpac launches the sales process for its $1.5bn-odd life insurance operations.

 

Resolution Life and TAL Insurance, owned by Japan’s Dai-ichi Group, are known to be vying for Westpac’s Life business, which sits within its wealth management arm.

TAL is taking advice for Bank of America, and when Resolution purchased AMP’s life insurance operation for $3bn last year it worked with Deutsche Bank.

Both will have very different strategies for the Westpac life insurance business — Resolution would run the assets off over time, while TAL has growth aspirations.

Goldman Sachs is thought to be working on the sale of Westpac’s wealth assets.