Westpac sells insurance division to Allianz for about $700m: sources

Westpac is understood to have sold its general insurance division to the world’s largest insurer for about $700m.

Westpac is understood to have sold its general insurance division to the world’s largest insurer, Allianz. for about $700m, according to sources.

The deal is expected to be announced to the market by Westpac this week and comes after both groups had been in exclusive talks in recent months.

Investment bank JPMorgan advised Westpac on the transaction.

Westpac and Allianz have a close relationship, with Allianz providing insurance products for the bank and some have suggested it may have had pre-emptive rights for at least some parts of the business.

The Westpac general insurance operations will likely strengthen the distribution channel for Allianz in Australia, where it is already a dominant player, and will offer the German insurer fire power to take on local groups such as Suncorp and IAG in personal insurance.

Allianz has operated in Australia for some time, buying the Manufacturers Mutual Insurance business in 2000 and it provides a wide variety of insurance products, ranging from industrial risk to professional indemnity.

The price paid is right in line with the predictions of experts around the market, which earlier suggested that Westpac would likely receive a price of about $700m for the operation.

Westpac was always anticipated to get on the front foot when it came to selling the business, given that rival CBA was also expected to put its general insurance operation on the market, which is considered superior to the Westpac offering.

It is understood that CBA is likely to move forward with its sale next year, and most estimate that business will sell for about $1bn.

Likely contenders include IAG, Suncorp, QBE and Zurich.