Westpac (ASX:WBC) share price edges higher on $725 million general insurance sale

The Westpac Banking Corp (ASX:WBC) share price is trading higher on Wednesday after announcing the $725 million sale of its general insurance business…
The post Westpac (ASX:WBC) share price edges higher on $725 million general insurance sale appeared first on Motley Fool Australia. –

handshake agreement

The Westpac Banking Corp (ASX: WBC) share price is trading higher on Wednesday following the release of a positive announcement.

In morning trade, the banking giant’s shares are up 0.5% to $20.30.

What did Westpac announce?

This morning Westpac announced that it will sell its Westpac General Insurance and Westpac General Insurance Services businesses to Allianz for $725 million.

The two parties have also entered into an exclusive 20-year agreement for the distribution of general insurance products to Westpac’s customers.

According to the release, the sale price represents a multiple of 1.3x FY 2020 gross written premium and is estimated to result in a small post-tax gain on sale in FY 2021.

Management advised that the sale of its General Insurance business adds around 12 bps to Westpac’s common equity Tier 1 capital ratio.

In addition to this, the transaction includes contingent payments subject to integration milestones and business performance over the next five years. There are also ongoing payments in accordance with the distribution agreement.

Management notes that this new distribution arrangement expands its existing partnership with Allianz, which has seen Westpac distribute a range of Allianz’s products to customers including Auto, Travel, Boat, and Business insurance since 2015.

Westpac’s Chief Executive Officer, Peter King, believes the agreement was a significant milestone in the quest to build a simpler, stronger bank.

He commented: “This transaction is another step in simplifying our business while continuing to help customers with their general insurance needs.”

“General Insurance products are important for many Australians and we are pleased to be entering a long-term partnership with a global insurance expert to continue to help customers protect the things they value,” Mr King said.

Westpac will retain responsibility for certain pre-completion matters and provide protection to Allianz via a combination of provisions, warranties, and indemnities.

The bank is expecting the transaction to complete in the second half of 2021. Though, it remains subject to various regulatory approvals.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Westpac (ASX:WBC) share price edges higher on $725 million general insurance sale appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!