QBE hopes for Bradbury moment in CBA race

QBE Insurance is believed to be taking on IAG and Suncorp in their quest to buy the CBA general insurance unit. Picture: AAP

QBE Insurance is believed to be taking on IAG and Suncorp in their quest to buy the CBA general insurance unit in the hope they trip at the finish line due to competition concerns.

The understanding around the market is that IAG and Suncorp have been shaping as the two strongest contenders and a deal could unfold shortly.

However, sources say QBE is also in the competition, being run by Goldman Sachs.

QBE will be arguing that Suncorp and IAG would face major opposition from the competition watchdog in buying the unit, given their existing market dominance.

But the understanding is that IAG, which is working with Bank of America, and Suncorp, aided by UBS, are bidding based on advice that they will be in a position to get around any opposition from the ACCC.

Sources say they would be happy to divest stakes.

It is understood that bids are due shortly.

Should IAG and Suncorp be knocked out of the race, other contenders that surface may be offshore parties, including Zurich.

Chubb and Tokio Marine were believed to be kicking the tyres last year.

Some say that while Zurich has been keen to expand, it is unlikely to kick off those plans with the acquisition of an insurance business that sells bank-distributed product.

A research note from UBS this month said that while an acquisition of the roughly $1bn business was logical for IAG and it could potentially pay more than its peers for an acquisition due to higher retention and synergies, it had the most risk of facing opposition from the competition watchdog.

Suncorp’s Australian home insurance portfolio is only slightly smaller than IAG’s $2.5bn, at $2.3bn, making any competition concerns similar.

This could put QBE in the best position, they said.