Swiss-based insurer Chubb is understood to have retreated in the competition to buy Zurich’s Australian general insurance operation, leaving Suncorp in the box seat to win the competition.
One source told DataRoom on Monday that Chubb, advised by Macquarie Capital, was out of the race, while another told the column that an acquisition by the European financial was now looking highly doubtful.
Chubb, which operates in 55 countries, has been circling Australian insurance assets in recent times, including CBA’s general insurance unit that was sold to Hollard Group for more than $625m last year.
It has more than $US174bn worth of assets and is listed on the New York stock exchange.
Suncorp was believed to be initially distracted with reviewing whether to embark on a demerger of its banking arm, but later emerged as being in the contest.
Sources have told DataRoom that the Queensland-based bank and insurer has been busy working on a transaction.
However, while there is a chance that others may still be in the contest, most are pointing to Suncorp as the most obvious buyer, although some even question its level of motivation for taking on the asset at the asking price.
The business is expected to sell for about $500m with final bids due in the coming weeks.
QBE was earlier said to be the most likely buyer for the unit, but sources said it was deterred by lower than anticipated earnings growth prospects that emerged once it started carrying out due diligence.
Suncorp, with Barrenjoey on board, was said to be a keen buyer of CBA general insurance last year when it was up for sale. It used investment bank UBS to chase the asset.
But a transaction was understood to have been challenging when it came to gaining permission from the Australian Competition and Consumer Commission.
DataRoom revealed Zurich’s sale plans for its Australian general insurance unit in October this year, with Goldman Sachs and PwC advising on the sale.
The offer excludes Zurich’s travel insurance arm consisting of the Cover-More Group it acquired in 2017 for $741m and its life insurance unit, consisting of the ANZ OnePath Life business that Zurich purchased in 2019 for $2.85bn.
Industry experts believe that the Swiss financial may be looking to stage an exit from the Australian general insurance market because it is sub scale and has a chequered history here.
Zurich’s sale follows others in the insurance space in recent years.
Westpac sold its general insurance division to Allianz for $700m last year and CBA this year divested its general insurance unit for $1bn to Hollard Australia in a move that sees banks focus more on their core lending operations.
Zurich is prominent in general insurance in Australia with 3 per cent of the market share, but Allianz Australia is the largest foreign-owned insurer.
Other major players here are IAG, Suncorp and QBE
Zurich offers investment and superannuation products alongside general and life insurance to its Australian customers.
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